Choose a denim jacket that fits over a sweater
Try a denim jacket over a real sweater, with the sleeves and shoulders moving. A good layered fit should not depend on leaving your arms at your sides.

Bring the sweater into the fitting room, or try it beneath the jacket at home before removing tags. Denim can feel roomy over a thin tee and restrictive over knitwear. Fasten the jacket, reach forward and bend your elbows. Pay attention to the upper arms and back rather than checking only whether the front buttons meet.
Separate room from excess bulk
A little space allows the layers to move, but an oversized jacket is not automatically the answer. Check where the shoulder seams fall and whether the sleeve length gets in the way. A dropped shoulder may be part of the intended design; it should still feel comfortable when the arm moves. Compare the garment measurements with a jacket you already like if shopping online.
Look at the sweater's own shape. A very thick sleeve or wide dropped shoulder can bunch inside a relatively narrow jacket even when the body has plenty of room. Try a smoother knit if that combination is important, or choose a jacket designed with a broader sleeve. Sizing up changes several dimensions at once, not only the tight area.
Check the hem with your usual pants
A cropped denim jacket may sit neatly above a higher waistband, while a longer version covers more of the sweater. Put on the pants you plan to wear and see whether the layers collect around the hips when seated. There is no need for every hem to line up, but the overlapping fabric should not feel cumbersome.
Roll or fold the cuffs only if the construction allows it comfortably. Several thick layers of denim can become stiff at the wrist. If the sleeve is consistently too long, an alteration or another fit may be more useful than a large permanent cuff. Check return conditions before making any changes.
Read the care labels on both jacket and sweater. Dark denim can have specific color-transfer or washing guidance, and knitwear may need a different routine. Avoid assuming they can be laundered together simply because they are worn together.
Once the fit works over the sweater, try it over a lighter top too. The jacket should have a useful range without needing to suit every possible layer. One comfortable combination for cool mornings and another for milder afternoons can be enough to make it a regular part of the closet.