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  • MPMD
    replied





    My understanding is that she would be able to defer up to 100% of her compensation from the Etsy business (minus expenses and 1/2 of self-employment tax) up to $18,000 per year, NOT just 20%. (This is assuming she makes less than $18k on the Etsy business.) Can someone confirm that this is correct? 
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    Yes, this is correct.
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    oh yeah sorry the 20% thing might be the employer side.

    apologies most of the questions on here seem to be about side gigs.

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  • jfoxcpacfp
    replied


    My understanding is that she would be able to defer up to 100% of her compensation from the Etsy business (minus expenses and 1/2 of self-employment tax) up to $18,000 per year, NOT just 20%. (This is assuming she makes less than $18k on the Etsy business.) Can someone confirm that this is correct?
    Click to expand...


    Yes, this is correct.

    Leave a comment:


  • STM
    replied




    she can contribute 20% of her net profit which is [income] – [expenses] – [1/2 of self employment tax] up to $53k/year.

     
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    My understanding is that she would be able to defer up to 100% of her compensation from the Etsy business (minus expenses and 1/2 of self-employment tax) up to $18,000 per year, NOT just 20%. (This is assuming she makes less than $18k on the Etsy business.) Can someone confirm that this is correct?

    Leave a comment:


  • jfoxcpacfp
    replied
    Best avenue is for her to lobby her employer to start a 401k. The simpler and less expensive route is a SIMPLE IRA but your wife wouldn't be able to do tax free backdoor Roths if she participated.

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  • MPMD
    replied
    there are dozens of threads on this, not trying to be snarky reading them has been helpful for me. i think WCI blog post on this is the single most commented as well.

    the answer to your last question is absolutely not.

    she can contribute 20% of her net profit which is [income] - [expenses] - [1/2 of self employment tax] up to $53k/year.

    the somewhat confusing thing is that as a sole proprietor she is both the employer and the employee so she can make contributions on both sides of that ledger.

    my guess is that with an Etsy biz this wouldn't be worth doing. i had about $50k in IC income for 2017 and this ended up leading to about a $10k solo 401k contribution. below $10k in income I probably wouldn't bother.

     

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  • pslfhopeful
    started a topic Self-employed 401k

    Self-employed 401k

    My wife does not have a work sponsored 401k.  We have maxed out my 401k and both backdoor IRA's.  She does have a small self-employed business selling items on Etsy.  For a self-employed 401k, can she only contribute up to what she earns with this side business or does earning even $1 allow her to fill up an entire self-employed 401k?
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