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Retirement account confusion

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  • Retirement account confusion

    I am sure I am overthinking this. Husband has had a year with job transitions.
    Husband had W-2 job for most of year - until November. Due to issues with employer not being able to take out electronically what we asked for, he has $17K in his 401K through that job for 2021. Joined another job where he is a partner and will get a K-1. Will earn around $82K through that job for 2021 in addition to $10K consulting (1099) fees. Will plan to put around $18K in solo 401K from K-1 and consulting (20%). Is there any way to get more money into the 401K from the job that he left to max out the $26,500? And nothing stopping us from doing a backdoor Roth for him, correct? We have not done backdoors in the past and understand this might be changing but wanted to take advantage of it if possible this year.

    I am 1099 and plan on putting $58K in solo 401K, but can I ALSO do a backdoor roth? Or is the total of both $58K?

  • #2
    On your situation, you can do both a BD Roth and your full solo 401k. The two are unrelated. And by the way, the attempt to end the BD Roth failed this year.

    Yes, he can do a BD Roth regardless of the 401k issues.

    Given he has left the employer, I do not see a practical way to plus the W-2 job 401k up to max for the year. Maybe if you had caught this before hand and could show the employer was not executing his instructions on contributions they could have fixed it then, but I doubt they would now.

    Probably not worth your concern at this point. I’d recommend just putting the additional funds ($9k=26-17) into a taxable account. Sure, the contribution was not tax deferred, but you will get the LTCG rates instead of earned income tax rates when you eventually withdraw it.