982. Laura answers a listener's question about how to prioritize retirement contributions when you have multiple jobs and accounts.
982. Laura answers a listener's question about how to prioritize retirement contributions when you have multiple jobs and accounts.
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Welcome back to Finance Friday, another special edition of Money Girl, where I answer your burning money questions! I love hearing from you; so, if something finance-related is on your mind, leave me a voicemail at 302-364-0308.
Today’s terrific question comes from Lisa S., who says, “Love the podcast! I recently left a 40-hour a week job for a 20-hour a week job. But it has benefits, including a 401(k) with an employer match of 4%. In addition, I also have two per diem “side hustles” that also offer 401(k)s, but neither of them pays matching contributions.
Should I contribute 4% to the 401(k) with a match, and then contribute more to the per diem 401(k)s? I don’t want to be strapped if I only work 20 hours, but I want to be sure that I’m contributing more when I earn more.
I also have a traditional IRA, but would rather take advantage of the benefits of contributing from my paycheck. Thank you!”
Lisa, thanks for your question, and congratulations on having multiple income sources! Having lots of retirement accounts is a terrific problem, and I’ll help you maximize them so you earn more, reduce taxes, and build a secure financial future.
What is employer retirement matching?
I love that Lisa is focused on the employer matching she’s eligible for at her new job! That should definitely be a priority when you work for a company or organization that offers a retirement plan, like a 401(k), 403(b), or 457, with matching funds.
A retirement account match is when an employer contributes to your retirement plan based on how much you put in, up to an annual limit. While employers are never required to offer matching contributions, many do because it's a valuable benefit that helps attract and retain good employees.
Retirement plan matching can also encourage you to participate in a retirement plan, so you invest at least enough to maximize the additional free money from your employer. If you’re not maxing out an employer’s match, you’re essentially saying “no thanks” to free money!
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Retirement matching examples
Companies usually choose to pay either a partial or a full retirement match. With a partial, your employer matches a portion of your contributions to your account, up to a limit.
For instance, a partial match could be receiving 50% of your contributions up to 6% of your salary. If you earn $100,000 annually, 6% of your salary is $6,000. If you contribute at least $6,000 over the year, your employer will match 50% or contribute $3,000 on your behalf.
What Lisa mentioned is likely a full employer match. That’s when your employer matches 100% of your retirement contributions up to a limit. For instance, if Lisa earns $100,000, the maximum match is 4% of that amount, or $4,000.
READ ALSO: How should I invest for retirement after a 401(k)?
What is retirement account vesting?
When you contribute to a workplace retirement plan, contributions from your paycheck are immediately 100% vested. That means you own them and can take them if you leave an employer.
However, most companies have a vesting schedule for matching contributions. That means the matching funds and their growth aren’t officially yours to keep until you’re fully vested. But if you're partially vested, you may be eligible to keep a certain percentage of the matching funds and their earnings if you leave the company.
The two main types of company vesting schedules are graded and cliff. Graded vesting is the most common and gives employees benefits gradually over several years. That allows you to own a percentage of the benefits, even if you leave the company after a year or two. A typical graded vesting schedule could be as follows, based on the number of work years you complete:
Cliff vesting happens all at once rather than gradually over time. For instance, your employer may require you to stay with the company for three years to become fully vested, and may not offer partial vesting. Once you complete three years of service, 100% of employer contributions are yours. But if you leave before completing three years, you get no benefit.
RELATED: What should I do with an old 401(k)?
What are 401(k) contribution limits?
No matter the type of workplace retirement account, there are annual limits to how much you can contribute. But here’s the good news: Employer matching doesn't count against an employee's annual contribution limit!
For 2025, you can put up to $23,500 into most workplace retirement plans. If you're over 50, you can make additional catch-up contributions. However, the total contributions from you and your employer are 100% of your salary up to $70,000, plus any catch-up contributions you qualify for.
For 2026, the annual contribution limit for workplace retirement plans will increase to $24,500. The total contributions from you and your employer will be 100% of your salary up to $72,000, plus applicable catch-up contributions when you’re over 50.
Note that the annual retirement contribution limit applies as an individual, not per account. In other words, if Lisa’s under 50, the most she could contribute across all three 401(k)s in 2025 is $23,500. But as I mentioned, her matching contributions aren’t included in that annual threshold.
LISTEN ALSO: 7 retirement rules changing in 2026
How to maximize 401(k) matching
Since matching contributions are free money, you receive an immediate return on your investment. If you receive dollar-for-dollar matching from an employer, you double your money as soon as you contribute. That doesn't even account for the growth those matching funds may earn through your chosen investments.
However, to reach your retirement goals, you'll likely need to contribute more than what's necessary to max out any matching funds. A good rule of thumb is to invest at least 10% to 15% of your gross income. For instance, if your employer matches 4%, ideally you'd contribute 11% of your own funds to reach the 15% target.
If you don't receive 401(k) matching, it's still wise to contribute at least 15% of your gross income. If you don't have a workplace retirement plan, consider investing through an individual retirement account (IRA) or a self-employed plan if you have part- or full-time business income.
LISTEN ALSO: What’s the Difference Between a Traditional and Roth 401(k)?
How to contribute more when you earn more
Getting back to Lisa’s question, after contributing 4% to the new 401(k), what’s her next best move? Since Lisa wants to contribute more as she earns more, I like the idea of contributing a percentage of her per diem income to those 401(k)s. That’s a convenient and easy way to automatically save more for retirement.
If Lisa has more than the annual workplace retirement limit to invest, she can make a separate IRA contribution, in addition to the 401(k) limit. For 2025, the IRA contribution limit is $7,000 or $8,000 if you’re over 50. The limits will increase in 2026 to $7,500 or $8,600.
However, the deductibility of traditional IRA contributions might be limited or eliminated based on income when you also participate in a workplace retirement plan. Another option is for Lisa to contribute to a Roth IRA if her income is under the annual limits.
For instance, to make a full Roth IRA contribution in 2025, a single taxpayer must earn less than $150,000, or less than $236,00 if you file taxes jointly. For 2026, the Roth IRA income cutoff will increase to $153,000 for single filers and $242,000 for those filing jointly.
Technically, there's no limit on the number of retirement accounts you can have. However, there are strict contribution limits for each type, and income limits that I just reviewed for a Roth IRA.
To sum up, I recommend that Lisa:
Thanks for the question, Lisa, and good luck!
Remember that you can call in with a question too, and I will put the phone number in the show notes.
That's all for now. I'll talk to you soon. Until then, here's to living a richer life!
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