W2 emp + new 1099 income- what next?

[gabe1701]

Thanks everyone for the shared info on these forums. I'm working through a new financial question and my intermediate-level financial brain is having trouble figuring out exact rules and best next steps, even after reading on the site and forum. I just keep confusing myself and maybe I'm making it too complicated, so here's the situation and question:

I'm a W2 employed doc in my late 30s and I do all the usual WCI stuff for W2 docs: max out employee contributions to 403(b) with about 9k employer contribution, max out 457(b), max out HSA, do a backdoor Roth IRA annually for my spouse and myself, contribute to 529 accts for the kids, and put some in taxable brokerage here and there. Occasionally put extra into the mortgage. Should get PSLF any time now. My personal financial goal is to be able to retire early, like early 50s, if I want to.

This year is my first with non-trivial 1099 income from side gig stuff- probably 30-40k by the end of the year.

-Where would you put this first to grow your net worth/nest egg? If that option maxes out, what is the next place?

-If your answer is individual 401(k), how much can I put in there? Is it 25% of my 1099 income(put into the account as an employer) up to 61k minus employee and employer contributions at my 403b, or did I mess that up?

-If your answer is individual 401(k), what is the experience of the brain trust with different i401k providers? My 403b and 457b are at Fidelity and my personal accounts are at Vanguard so for the sake of simplicity I would set things up at one of those if no big difference, but if there is a significant difference I would go elsewhere.

Thanks all.

[GasFIRE]

i401k is a great place to start for 1099 income. Your calculation is close, but is actually 20% of your Net Business Profit (from your Schedule C) less 1/2 of the self-employment tax minus the 403b contributions that you noted. Nothing wrong with taxable for the rest. If you retire early or even if you don't, taxable gives you flexibility in how you distribute tax-advantaged accounts in the future. Unless you need the Roth option for your i401k, either VG or Fidelity is fine. VG does have the Roth option, but ETrade would be an even better choice since it also allows in-plan Roth rollovers of your pre-tax funds.

[spiritrider]

Some help bridging your impression with GasFIRE's explanation.

The maximum employer contribution is 25% of compensation. For a self-employed individual, the employer contribution itself reduces compensation.

Therefore, the maximum self-employed employer contribution is calculated as net earnings from self-employment (self-employed earned income) = (business profit - 1/2 SE tax) * 20%.

[jfoxcpacfp]

As per GasFIRE and spiritrider:

1. Solo-k profit-sharing +
2. Taxable account

All in an appropriately-diversified low-cost ETF/Mutual Fund equity portfolio. Use the home office deduction if you have a dedicated home office space for your side hustle.