She Maxed Out Retirement Plans at Two Research Labs. The IRS Called $24,500 of It Excess.

A research scientist splits her week between two labs working on a joint supercomputing project. Each employer issues a separate paycheck and provides its own retirement portal. The university offers a 403(b). The federal contractor offers a 401(k). She contributes $24,500 to each, and both dashboards congratulate her for reaching 100% of the annual limit. One employer sees $24,500. The other sees $24,500. The IRS sees one worker who deferred $49,000.

She did not double her tax shelter. She exceeded it by $24,500.

Two Employers Still Share One Limit

The employee contribution limit for 401(k) and 403(b) plans belongs to the worker, not the employer. Separate payroll departments do not create separate ceilings. For 2026, someone younger than 50 can defer up to $24,500 across all 401(k) and 403(b) plans combined. Workers 50 and older can generally add an $8,000 catch-up contribution, while those turning 60 through 63 can add as much as $11,250. Those catch-up amounts are also individual limits shared across the plans.

Her two employers have no easy way to catch the mistake. Each payroll system sees only the contributions made through that employer. Tracking the combined total falls to her. If she discovers the excess, she should contact a plan administrator and request a corrective distribution. The excess and related earnings generally need to come out by April 15 of the following year. Miss that deadline, and the same money can be taxed once in the year it was contributed and again when it is eventually withdrawn.

One Plan Really Does Get a Separate Bucket

A governmental 457(b) follows a different rule. Its deferral limit stands apart from the combined 401(k) and 403(b) ceiling. If the scientist works for a public university or state laboratory that offers a governmental 457(b), she may be able to place $24,500 there in addition to the $24,500 shared by her other plans. That is not an exception invented by the employer. The IRS treats the 457(b) limit separately.

Plan details still matter. Some longtime 403(b) participants qualify for a special catch-up provision, and nongovernmental 457(b) plans carry different restrictions. She needs the actual plan documents before assuming a third account creates more room.

Social Security Still Sees Both Paychecks

Pretax retirement contributions reduce the wages subject to federal income tax, but they do not erase wages from Social Security’s view. The deferred amounts remain in the Social Security and Medicare wage boxes on each W-2. The IRS specifically includes elective deferrals in those wages.

That distinction matters later in a career. Someone collecting Social Security before full retirement age (FRA) cannot use a large 401(k) or 403(b) contribution to push wages beneath the retirement earnings-test limit. Social Security generally counts the covered wages before those deferrals. The two systems therefore aggregate her pay for different reasons. The IRS combines her deferrals to enforce one contribution ceiling. Social Security combines the covered wages to maintain one earnings record.

One More Rule Splits the Employers Apart

For workers eligible to make catch-up contributions, the mandatory Roth rule introduces the opposite result. Beginning in 2026, someone whose prior-year wages from a plan sponsor exceeded $150,000 generally must make catch-up contributions to that employer’s plan on a Roth basis. With two unrelated employers, wages are generally tested against each sponsoring employer separately. Her combined salary could exceed $150,000 while neither individual W-2 crosses the line. One rule combines the plans; another looks at the employers one at a time.

What to Check Before the Final Paycheck

Three steps can prevent an April correction:

1. Add the year-to-date employee deferrals shown on both pay stubs. Include pretax and Roth contributions.
2. If the combined amount is approaching the limit, reduce contributions through one payroll system before the final paycheck. Preserve any available employer match when deciding which one.
3. Ask whether the public employer offers a governmental 457(b) or a special 403(b) catch-up before assuming no additional room remains.

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