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  • 401k contributions?

    So I'm a EM guy, work for multiple groups all on 1099s. I am going to contribute to the only 401k (solo) I have. I can stash away up to 54k correct? I am not incorporated. I am not a partner in any group and do not get a match.

  • #2
    yes, that is correct. Since you qualify as being an independent contractor, you can contribute to the 401k both from the employee and the employer portions, which adds up to a limit of 54k a year. What's more, is that if you also have a w2 position at one of your gigs, you can also have a SEP IRA in addition to your 401k.

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    • #3
      I do not have to specify anything specific. I can just send a one time personal check for 54k to fidelity account, correct?

      Comment


      • #4


        What’s more, is that if you also have a w2 position at one of your gigs, you can also have a SEP IRA in addition to your 401k.
        Click to expand...


        Sorry, I disagree. If zback is an employee, it is up to the employer to set up and fund the SEP. Perhaps I misunderstood what you were saying - anything you could add to the original statement?
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

        Comment


        • #5




          I do not have to specify anything specific. I can just send a one time personal check for 54k to fidelity account, correct?
          Click to expand...


          I would talk to Fidelity, but they should have you fill out a deposit form on which you'll show the employee and employer contribution.  In terms of how this gets sent in I know you can wire or send a check for the employer contribution - not sure about the employee contribution.  Regarding the SEP comment above, you wouldn't be able to safely do the Backdoor Roth if you did that.

          Comment


          • #6




            I do not have to specify anything specific. I can just send a one time personal check for 54k to fidelity account, correct?
            Click to expand...


            (see below for correction of my mistake)




            I would talk to Fidelity, but they should have you fill out a deposit form on which you’ll show the employee and employer contribution.
            Click to expand...


            TDA d/n care about the division between employer and employee when you contribute and I bet it's the same with Fidelity. You just send or wire the $$.
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

            Comment


            • #7







              I do not have to specify anything specific. I can just send a one time personal check for 54k to fidelity account, correct?
              Click to expand…


              Assuming you are filing as a sole proprietor or SMLLC, you must contribute the $18k by 01/15/18 and the balance of $36k by the due date of your income tax return, including extensions. If you are incorporated, you need to contribute $18k by 12/31/17.




              I would talk to Fidelity, but they should have you fill out a deposit form on which you’ll show the employee and employer contribution.
              Click to expand…


              TDA d/n care about the division between employer and employee when you contribute and I bet it’s the same with Fidelity. You just send or wire the $$.
              Click to expand...


              Fidelity's form:

              https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/self-employed-401k-contribution-remittance.pdf

               

              Comment


              • #8





                What’s more, is that if you also have a w2 position at one of your gigs, you can also have a SEP IRA in addition to your 401k. 
                Click to expand…


                Sorry, I disagree. If zback is an employee, it is up to the employer to set up and fund the SEP. Perhaps I misunderstood what you were saying – anything you could add to the original statement?
                Click to expand...


                I guess what I meant was if he was an employee and had an employer SEP with matching contributions, then he could still setup another retirement plan if he also had a 1099, like a 401k. Or, if he's got two 1099 jobs, could setup two plans for each...

                Comment


                • #9










                  I do not have to specify anything specific. I can just send a one time personal check for 54k to fidelity account, correct?
                  Click to expand…


                  Assuming you are filing as a sole proprietor or SMLLC, you must contribute the $18k by 01/15/18 and the balance of $36k by the due date of your income tax return, including extensions. If you are incorporated, you need to contribute $18k by 12/31/17.




                  I would talk to Fidelity, but they should have you fill out a deposit form on which you’ll show the employee and employer contribution.
                  Click to expand…


                  TDA d/n care about the division between employer and employee when you contribute and I bet it’s the same with Fidelity. You just send or wire the $$.
                  Click to expand…


                  Fidelity’s form:

                  https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/self-employed-401k-contribution-remittance.pdf

                   
                  Click to expand...


                  ...and so it's not 
                  Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                  Comment


                  • #10








                    What’s more, is that if you also have a w2 position at one of your gigs, you can also have a SEP IRA in addition to your 401k.
                    Click to expand…


                    Sorry, I disagree. If zback is an employee, it is up to the employer to set up and fund the SEP. Perhaps I misunderstood what you were saying – anything you could add to the original statement?
                    Click to expand…


                    I guess what I meant was if he was an employee and had an employer SEP with matching contributions, then he could still setup another retirement plan if he also had a 1099, like a 401k. Or, if he’s got two 1099 jobs, could setup two plans for each…
                    Click to expand...


                    I think we're going in circles and confusing zback (me, too, for that matter). As he stated, he's solely IC. No opportunity for a 2nd plan. If he has 2 1099 jobs (which he does), he still can have only one plan. All of his IC income is aggregated for purposes of the $54k limit.
                    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                    Comment


                    • #11


                      Assuming you are filing as a sole proprietor or SMLLC, you must contribute the $18k by 01/15/18 and the balance of $36k by the due date of your income tax return, including extensions. If you are incorporated, you need to contribute $18k by 12/31/17.
                      Click to expand...


                      Are you sure?  For non-incorporated I believe the entire amount can be contributed by the tax deadline.  The "employee" merely must "elect" their contribution before then, by Dec 31st.

                      Comment


                      • #12













                        I do not have to specify anything specific. I can just send a one time personal check for 54k to fidelity account, correct?
                        Click to expand…


                        Assuming you are filing as a sole proprietor or SMLLC, you must contribute the $18k by 01/15/18 and the balance of $36k by the due date of your income tax return, including extensions. If you are incorporated, you need to contribute $18k by 12/31/17.




                        I would talk to Fidelity, but they should have you fill out a deposit form on which you’ll show the employee and employer contribution.
                        Click to expand…


                        TDA d/n care about the division between employer and employee when you contribute and I bet it’s the same with Fidelity. You just send or wire the $$.
                        Click to expand…


                        Fidelity’s form:

                        https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/self-employed-401k-contribution-remittance.pdf

                         
                        Click to expand…


                        …and so it’s not ?
                        Click to expand...


                        Right, so same check but they want you to differentiate the employee vs employer components (it appears).

                        Comment


                        • #13


                          Right, so same check but they want you to differentiate the employee vs employer components (it appears).
                          Click to expand...


                          I believe Fidelity just has that there for the customer's record-keeping, they don't actually keep track of it.

                          Comment


                          • #14





                            Assuming you are filing as a sole proprietor or SMLLC, you must contribute the $18k by 01/15/18 and the balance of $36k by the due date of your income tax return, including extensions. If you are incorporated, you need to contribute $18k by 12/31/17.
                            Click to expand…


                            Are you sure?  For non-incorporated I believe the entire amount can be contributed by the tax deadline.  The “employee” merely must “elect” their contribution before then, by Dec 31st.
                            Click to expand...


                            No, I'm not sure and you are absolutely right. I did not check with my partner first, and should have - she handles all of the filing deadlines. The rules are:

                            • 15 days after your final paycheck to contribute the employee portion - this is for corporations.

                            • Sole proprietorships, SMLLCs, and partnerships, due date of the tax return, including extensions. I'm not sure about the 12/31 "election", though - what are you referring to?


                            I'll delete what I typed above. Thx!

                             
                            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                            Comment


                            • #15
                              This is a common oversight of one-participant 401k plans. An employee elective deferral can not be made before a deferral election has been made.

                              For a w-2 employee, this means the election must occur before the payroll that deducts the deferral occurs. However, for the self-employed, their compensation is treated as being received on the last day of the year. Therefore, this means the "election" must be made by 12/31.

                              This is not something that is filed with the IRS. It is simply retained in the employer's records. An election remains in effect until revoked or changed. This can be a simple % of compensation, fixed contribution over a period or some more complex form as long as it is deterministic when applied to compensation.

                              I'm sure if the IRS ever requested this from a sole proprietor, they could "find" this in their records. However, I suggest that anyone who can't find theirs, do so now or create one before 12/31/17.

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