max amount I can contribute to a new solo 401k with an existing 403b and IRA

[akmd]

Greetings. This is my first post here, and I apologize if this has been addressed before, but I did not see a specific answer to this when I searched.

I have a question and wanted to see if you guys can help me. I need clarity.

I am employed currently. My employer is a non profit organization, and offers a 403b as well as a 457 plan. I contribute 18k to both for salary deferral.

I also have an IRA with vanguard, which is from residency and has done well. I contributed 5500 this year to it.

I also received 56K this year in due wages owed to me from 2016. Can I contribute to a solo 401k and reduce my 1099 income of 56K that I received this year?

And if so, how much can I contribute. Fidelity and etrade calculators say ~28K. But that includes employee contribution of 18 K. I already contribute 18K towards a 403 b plan. Will I still be eligible for a solo 401k?

Will I need to rollover my vanguard IRA temporarily to my 403b (VALIC is the plan administrator) before I can do a solo 401k?

Can I still do a backdoor roth? And if so, I will need to roll over my ira contribution this year and NOT take a deduction, correct?

I cant find an answer to this. Your help will be appreciated.

[jfoxcpacfp]

Please clarify 'due wages' and I'll do my best. I am not familiar with that term.

[akmd]

I was supposed to get them in 2016, but there was a dispute and the case was settled out of court, so I got it in 2017.

[spiritrider]

I believe that even if this settlement was for unpaid wages and is paid on a 1099-MISC, it does not necessarily mean that it can be used to adopt a one-participant 401k plan and make contributions. You need to be a self-employed individual with earned income from a trade or business to do so. You have no earned income from a trade of business. Some relevant points from the Internal Revenue Code.

26 U.S. Code § 401 - Qualified pension, profit-sharing, and stock bonus plans, (c) Definitions and rules relating to self-employed individuals and owner-employees For purposes of this section—

(1) Self-employed individual treated as employee

     (A) In general The term “employee” includes, for any taxable year, an individual who is a self-employed individual for such taxable year.

     (B) Self-employed individual The term “self-employed individual” means, with respect to any taxable year, an individual who has earned income (as defined in paragraph (2)) for such taxable year.

(2) Earned income

     (A) In general The term “earned income” means the net earnings from self-employment (as defined in section 1402(a)), but such net earnings shall be determined—

          (i) only with respect to a trade or business in which personal services of the taxpayer are a material income-producing factor

 

 

[MPMD]

spiritrider wrote:

I believe that even if this settlement was for unpaid wages and is paid on a 1099-MISC, it does not necessarily mean that it can be used to adopt a one-participant 401k plan and make contributions. You need to be a self-employed individual with earned income from a trade or business to do so. You have no earned income from a trade of business. Some relevant points from the Internal Revenue Code.

 

Click to expand...

that sounds spot on to me.

i would not try to do a solo 401k with a wage settlement. have never been under the impression that it's as simple as 1099 = solo 401k. i had a liquidation of a 457b account reported as 1099.

[akmd]

thanks