Solo 401k employee contribution question

[JT439]

My solo 401k is with Etrade.

I have an S corp.

Somehow I forgot to make my 2020 employee contribution to my 401k.

Can I write a check directly from my s-corp to my Etrade solo 401k to make the 2020 employee contribution?

I would memo the check appropriately and designate it accurately within the etrade system (year, employee vs employer, etc).

I don't think it will process and clear in time if I try to make the contribution through my payroll system.

Thank you!

[jfoxcpacfp]

You have until 1/15/21 (or it may be 1/31/21 - I’m not the payroll person) to make your employee 401k contribution. You need a paycheck dated by 12/31 with appropriate Medicare taxes and withholding the employee contribution). You will have federal (and perhaps state and local) tax filing and deposit requirements to fulfill.

Of course, you surely have an experienced CPA for tax advice on your s-corp to whom you can direct this question.

[jacoavlu]

you can’t just write a check from the Corp

have to run payroll and withhold the deferral from compensation with a pay date by 12/31

then, the Corp can remit the contribution to the Plan after 12/31, just within a reasonable period of time.

[spiritrider]

jfoxcpacfp and jacoavlu are correct. An S-Corp 2% shareholder-employee's employee deferrals can only come after an employee deferral election and be deducted from net compensation not already paid with a pay date by 12/31.

The deadline for depositing one-participant 401k employee deferrals with December pay dates is the 15th business day of January (1/22/2021). It must be included in the 2% shareholder-employee's W-2 Box 12 and filed by 1/31, but because it is a Sunday this year 2/1/2021.

[JT439]

Thank you all for your help!

[midwest_doc]

To piggyback on the solo 401k question. I am a W-2 employee and my employer offers a 457 and 403b plan. I have opened a solo 401k in order to roll over a retirement account from residency. I make some 1099 income throughout the year from consulting/chart reviews etc. I might make $10k a year of 1099 income. What are the rules as to how much of my 1099 income I can contribute? I assumed I could not contribute all of it to the 401k because I don't meet some income requirement. Thanks.

[notanotherusername]

Did you max out your employEE contributions to the 403B?

[jfoxcpacfp]

To piggyback on the solo 401k question. I am a W-2 employee and my employer offers a 457 and 403b plan. I have opened a solo 401k in order to roll over a retirement account from residency. I make some 1099 income throughout the year from consulting/chart reviews etc. I might make $10k a year of 1099 income. What are the rules as to how much of my 1099 income I can contribute? I assumed I could not contribute all of it to the 401k because I don't meet some income requirement. Thanks.

If you have contributed $19,500 to the 403b, you can contribute up to 20% of your (Net Profits - related FICA taxes). In addition, the total of all contributions to your (403b + solo-k) cannot exceed a total of $57k for 2020. This includes employer profit sharing, iow.

[midwest_doc]

Yes, I maxed out my plan. I have contributed $19,500 for 2020. If I have $10k in 1099 income then I can only contribute $2k to my solo 401k. Do I have this correct? Thanks for the help!

[spiritrider]

No, refer to the previous post from jfoxcpacfp.

Your maximum employer contribution = ($10K (business income) - business expenses - 1/2 SE tax) * 20%.