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Solo 401K with W2 and 1099 income

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  • Solo 401K with W2 and 1099 income

    Basic question, but need something to show my CPA.

    For 2022, I'll have W2 and 1099 income from two distinct jobs. I'll max out the $20,500 Employee contribution for my 401K with my W2 job and receive about $10,000 in Employer match/profit sharing.

    I'm planning on opening a solo 401K to contribute 20% of my Net adjusted business profits from my 1099 gig as the Employer contribution (keeping all contributions under $61K total.).

    My CPA insists that this cannot be done due to my W2 job. I've sent him the Oblivious Investor calculator, etc. He states that only people who are sole 1099 earners can contribute to a solo 401 K and that having any W2 income and employee contributions from another job makes me ineligible. Is there anything concrete I can show him (other than blogs, etc?)

    Everything else he's done the past couple of years seems accurate so I don't want to start over with a new CPA for this one issue. Please help.
    Last edited by VirginiaMD; 03-17-2022, 01:38 PM.

  • #2
    This article should speak to you and your CPA:

    https://www.whitecoatinvestor.com/multiple-401k-rules/

    Within that there's a link to this from the IRS: https://www.irs.gov/retirement-plans...ibution-limits

    and this:

    https://www.law.cornell.edu/uscode/text/26/415

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    • #3
      Ask them what is the basis for their claim. Clearly they must know that contributions to multiple 401k plans are allowed as long as you remain within the limits.

      A one-participant 401k plan is a full-fledged 401k with relaxed Form 5500-EZ reporting requirements. Other than that, the tax code is exactly the same.

      Then specifically direct them to examples 1&2 towards the end of the second link.

      Example 1 is directly on point.

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      • #4
        Thanks so much!

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        • #5
          You might mention that his tax software will likely calculate the max contribution automatically if he just follows the steps. Then he can provide you with the exact contribution after your return is final.
          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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