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Confused about Solo 401k

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  • #16
    Originally posted by Mikey123 View Post
    I have been wondering about this myself after getting a new 1099 job (main job W2)
    2022 Limit is $61k
    I contribute my normal W2 401k $20,500
    My W2 employer contributes $36k
    Total = $56,500

    Means I am short $4,500 of max contribution (61k-56.5k)

    I just got a 1099 job. Say I make $20k+ on this job. Can I open a solo 401k and put in $4,500 this year?

    Thanks for your help
    Not exactly, but you can get close with PS, and it also depends on how you structure your solo-k (SR would make that sound much better and more professional than “structure”):
    1. solo-k PS (Profit Sharing) contribution is calculated as 20% of (net 1099 profits - (50% of related FICA taxes))
    2. Post-tax (intent for MBD Roth) contribution could approach $20k
    3. The difference between your main job 401k contributions (EE + ER) and $61k is irrelevant in the calculation of how much you can contribute to solo-k.
      • If your day job had a 403b instead of 401k, then you w/b correct about the max contribution
      • But you could not reach that amount with 1099 income of only $20k.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #17
      While there is only a single employee deferral limit (2022 = $20,500) across all 401k, 403b and SIMPLE IRA plans. There is a separate (employee + employer) annual addition limit (2022 = $61K) for each unaffiliated employer. As long as the 1099 client is not an affiliated employer of your W-2 employer, you have a separate (employee + employer) annual limit.

      You are still subject to the 401k employer contribution limit. For a self-employed individual this is 20% of your self-employed earned income (net earnings from self-employment) = business profit - 1/2 SE tax.