Question: Several employees want to participate in two multi-employer 401(k) plans, but their combined contributions would exceed the Section 415 limitations on overall contributions. Can the employees legally participate in both plans during the same year?
Answer: Yes. These employees have lucked out. Under Section 415, employees’ overall contributions into a 401(k) plan—including pretax, after-tax and employer matching contributions—are limited to the lesser of 100% of employees’ compensation or, for 2012, $50,000.
For purposes of the Section 415 limitations, the general rule is that employers must combine all of their 401(k) plans. But, there’s an exception for multi-employer plans, so the Section 415 limitations apply separately to employees who participate in both plans.