Maxed W-2 403b. Need help with 1099 Retirement $$

[bcc865]

Hi Braintrust,

Thanks for the help.

I have both a W-2 Job and also 1099 Income. I already maxed my 18K in a 403b via my W-2 job. I also opened a individual 401K in December of 2016, but have not yet put anything in it because I am confused as to how much money I can contribute.

Since I already deducted 18K from my W-2, I'm assuming I cannot deduct another 18K from my 1099 income and place that into my i401K.

That leaves me with just 20% of my 1099 income as a profit sharing contribution correct? Would my limit to contribute into my i401K be 53000-18000=35000? (assuming that 20% of my 1099 income is at least that amount)

Also, I back doored 5500K into a Roth IRA during the 2016 calendar year. Aside from filling out the 8606 form, is there anything else I need to do?

Thanks again for all of the help! Trying to figure out how to do my own taxes and such so that I know where the $ is going.

[DMFA]

bcc865 wrote:

Hi Braintrust,

Thanks for the help.

I have both a W-2 Job and also 1099 Income. I already maxed my 18K in a 403b via my W-2 job. I also opened a individual 401K in December of 2016, but have not yet put anything in it because I am confused as to how much money I can contribute.

Since I already deducted 18K from my W-2, I’m assuming I cannot deduct another 18K from my 1099 income and place that into my i401K.

That leaves me with just 20% of my 1099 income as a profit sharing contribution correct? Would my limit to contribute into my i401K be 53000-18000=35000? (assuming that 20% of my 1099 income is at least that amount)

Also, I back doored 5500K into a Roth IRA during the 2016 calendar year. Aside from filling out the 8606 form, is there anything else I need to do?

Thanks again for all of the help! Trying to figure out how to do my own taxes and such so that I know where the $ is going.

Click to expand...

1. You cannot make any more "employee" contributions, aka elective deferrals, into any 401(k) or 403(b).


2. Since you have a 403(b), the $53,000 limit ($54,000 for 2017) is therefore across all 403(b) and 401(k) accounts combined according to IRS Pub 571 chapter 3, not for each account like it is with just 401(k).  See WCI's multiple 401(k) rules post for more.  So yes, your calculation is (mostly) correct.  It'll come out to be more like 18.6% or so at the most, since it's 20% of total, minus expenses, minus half of self-employment tax.  I don't know what the deadline is for 2016 contributions; I think it's April 18, or October 18 if you file an extension.


3. Assuming you have no pre-tax IRAs (or, rather, didn't on 12-31-2016 as per your form 5498s), then nope, that should be it.

[spiritrider]

Normally the 415c annual addition limit (2016 = $53K, 2017 = $54k) is per employer. However, there is a special rule that 403b contributions must be combined with plans at employers you have a > 50% ownership in. So yes, the SEP IRA limit for 2016 would be $53K - 403b employee deferrals - 403b employer contributions or 20% of net self-employment income = net business profit - SE tax, whichever is lower.

A backdoor Roth contribution requires two entries on Form 8606. The non-deductible contribution and the Roth conversion. The 2016 non-deductible contribution will go on the 2016 Form 8606. The conversion will go on the 8606 in the year of conversion.

The SEP IRA contribution in 2017 even if for 2016 will raise havoc with any 2017 Roth conversion. The non-deductible contribution will be taxable on a pro-rata basis of the total pre-tax IRA balance (traditional IRA, SEP IRA and SIMPLE IRA) as of 12/31/17. You will need to either roll pre-tax IRA balances to an employer's qualified plan (if they accept incomeing IRA rollovers) or open a Solo 401k for 2017 and roll the IRA balances into that.