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Solo401k quick question

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  • #16

    Hello! First time poster here and I’d like to thank everyone for contributing to the wealth of knowledge on this forum!

    Very briefly, I’m a doc in my third year after fellowship and would like to get some of my 1099 income from 2017 into a Solo 401k. I’ve missed the deadline to open a Solo 401K for 2017 but would like to follow the above strategy by opening a SEP IRA for 2017 right now in January 2018 and then rolling it over to the soloK once I have that opened through Vanguard in the next month or two before April. However, I have already contributed to my traditional IRA on Jan 1 and initiated the backdoor rollover to my Roth IRA for 2018. Once that completes this week, all my IRA funds will be in my Roth (backdoor contributions from 2016, 2017, and 2018).

    1) My question is regarding the timing, is it still acceptable to open a SEP IRA for 2017 after I’ve already completed back door for 2017 and 2018?

    2) Also, since I’ve maxed out my elective deferral to 401k from my W2 employer for 2017, I should still be able to contribute 19.7% of my net profits to the soloK from my 1099 according to DMFA calculations above?

    Thank you! -Dima
    Click to expand…

    I’m on a similar boat. I earn both W2 and 1099. On the W2, I maximized my 401k in 2017. I also did backdoor Roth in 2017. Didn’t have a solo 401k for my 1099 income and now wondering if I can open a SEP IRA for the 2017 1099 income. Thanks.
    Click to expand...

    Yes, you both have until the due date of your tax return, including extensions (10/17/18), to fund a SEP IRA for 2017. You can then roll that balance into a solo-k for 2018. You will need to roll in to the 401k before 12/31/18 if you do a backdoor Roth conversion in 2018 or the conversion will be taxed under the pro-rata rule.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087