solo 401k for moonlighting

[kritas]

I’m starting my first job out of fellowship in the fall at an academic hospital. I regrettably have ignored financial planning until now and am trying hard to get up to speed and save aggressively for retirement.  I'm SO glad I found WCI!

I have some questions about whether I can and/or should open a solo 401k.   Here's my situation:

• I will have a 403b with employer match, 457b with employer match, an HSA.  I plan to max all of these out (18k+18k+3.4k).


• Also plan do the backdoor Roth IRA, so I will open traditional and Roth IRA’s.


• I’ve done a small amount of moonlighting during fellowship and will continue this as an attending. It’s about 10k/year of 1099 income.


• For reference, I’m not married and have no dependents.

Here are my questions:

1. Am I allowed to open a solo 401k if I also have an IRA? I think the answer is yes, but want to make sure.  The IRA is just for backdoor Roth purposes so it will be empty 365 days of the year.


2. If I put 18k into my 403b, then the only money I can put in the solo 401k is my 20% employer match on my moonlighting income, right?


3. Is it worth opening a solo 401k for only ~2k?


4. Is there anything else I can do to get more money in retirement accounts?

Thank you so much for any advice and clarification you can offer!

[Dr. Mom]

1. Yes

2. Yes

3. Yes.  You will have it ready to go if you ever switch jobs and need to roll into it.

4. Even if you could, I would submit you are doing enough.  Start taxable investing as it will offer you much flexibility.

[jfoxcpacfp]

kritas wrote:

Am I allowed to open a solo 401k if I also have an IRA? I think the answer is yes, but want to make sure.  The IRA is just for backdoor Roth purposes so it will be empty 365 days of the year. If I put 18k into my 403b, then the only money I can put in the solo 401k is my 20% employer match on my moonlighting income, right? Is it worth opening a solo 401k for only ~2k? Is there anything else I can do to get more money in retirement accounts?

Click to expand...

#2 - note that the contribution is based on the net profits from your IC income, not the gross (what you earn).

#3 - the best use of your solo k in the beginning will not be for extra savings, but to serve as a receptacle if/after you leave your new job.

#4 - retirement planning does not involve only tax-blessed "retirement" accounts. As Dr. Mom said, you should also include a taxable account in your portfolio for many reasons. Flexibility is and preferential tax rates are 2 of those reasons.