Solo 401k for a 1099

[SEdoc618]

Hello,
This last year I had income as an employee from two jobs (W-2) as well as income from a 1099 as a sole proprietor. Last year, I contributed to my employer's plans as an employee up to the limit of $19,500. I also established a solo 401k at Vanguard last year under my sole proprietorship, and had contributed <20% of my business income as an employer contribution.
He told me that I'm unable to contribute at all to my solo 401k, but I'm not sure if he's just getting things confused or doesn't understand the situation. Am I explaining this correctly, or am I getting it completely wrong? Is there a better way that I can explain this? Thanks for any help on this.

[bovie]

Hello,
This last year I had income as an employee from two jobs (W-2) as well as income from a 1099 as a sole proprietor. Last year, I contributed to my employer's plans as an employee up to the limit of $19,500. I also established a solo 401k at Vanguard last year under my sole proprietorship, and had contributed <20% of my business income as an employer contribution.
He told me that I'm unable to contribute at all to my solo 401k, but I'm not sure if he's just getting things confused or doesn't understand the situation. Am I explaining this correctly, or am I getting it completely wrong? Is there a better way that I can explain this? Thanks for any help on this.

Who is he?

You can make employER contributions to your solo 401(k) regardless of whether you max out your W-2 employEE contributions, assuming you have appropriate 1099 income to support it.

[GasFIRE]

He is wrong as long as there is no control group or affiliated service group issues. As a sole proprietor you should be able to contribute 20% of your net business profit less 1/2 your SE tax as shown on Schedule C to your solo 401k.

[childay]

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

[Brains428]

If he is your accountant, then he should be fired.

I also prefer fidelity solo401k, but maybe Vanguard has improved over the last 4 years (for that specific plan)

[SEdoc618]

Who is he?

You can make employER contributions to your solo 401(k) regardless of whether you max out your W-2 employEE contributions, assuming you have appropriate 1099 income to support it.

I'm sorry, I meant to say my accountant. Apparently they had some terminology confused but I definitely double checked the Keogh contribution worksheet to make sure they applied it (which tracks back to schedule1, line 16). I thought I was going crazy when they told me I couldn't contribute any more beyond the $19,500. Either way not encouraging. Vanguard has been ok so far but I also have my IRA's there so it does help for simplicity. Thank you for your responses.

[jfoxcpacfp]

Maybe if you referred to it as “profit sharing”? Explain it is the “employer” contribution not the “employee’s”? Regardless, I believe your tax preparer may be out of his comfort zone and digging in his heels to remain there.

[bovie]

I'm sorry, I meant to say my accountant. Apparently they had some terminology confused but I definitely double checked the Keogh contribution worksheet to make sure they applied it (which tracks back to schedule1, line 16). I thought I was going crazy when they told me I couldn't contribute any more beyond the $19,500. Either way not encouraging. Vanguard has been ok so far but I also have my IRA's there so it does help for simplicity. Thank you for your responses.

I see. Yeah, time for a new accountant.