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Hi,
I'm an dentist. 2 years out of residency and 2017 was the first year I started contributing to tax-deferred accounts. I contributed to my solo 401k for 2017 but now I'm second guessing myself.
I work as an independent contractor (1099 income) for a couple offices locally. For simplicity sake, I work at office A and office B. Both A and B have their own LLCs that do business as Gorgeous Smiles, for example Gorgeous Smiles A, Gorgeous Smiles B. Although these offices operate under the umbrella name Gorgeous Smiles, each has its own set of owners. I'm a minority partner at office A. I'm paid as an IC (1099 income) at both offices. In addition I receive W2 (for being board member) and K 1 (owner profit) from office A.
I do not have a separate LLC for my independent contracting work. I filed schedule C for 2016 tax return.
Income (the 1099 income below is close to the exact amount. I'm not listing any W2 or K1 income since I don't think they are relevant in this case)
Office A: 260k 1099 income. Have ownership at A
Office B: 140k 1099 income. No ownership.
Gorgeous Smiles offers 401k to its employees and owners. I chose to set up a solo 401k instead. I could contribute more with my 1099 income and it is way cheaper.
So in 2017 in contributed a total of 54k to solo 401k. BUT then I saw this posted by spiritrider recently and now I'm confused.
“For purposes of section 401, a sole proprietor is considered to be his own employer, and the partnership is considered to be the employer of each of the partners. Thus, an individual partner is not an employer who may establish a qualified plan with respect to his services to the partnership.”
so my questions are:
1. Can I still use the solo 401K instead of the practice's 401k plan? why not?
2. And if not, should that only apply to my 260k income from practice A since that is the only office I have ownership. I can still use the 140K from office B to fund my solo 401K, correct? why not?
3. if only 140K income from office B be used to contribute to solo 401k, then I overfunded my 401 k. Should be less than 54k based on the income of 140k. Is there a penalty to withdraw? and how to amend this with the IRS, which form?
4. If the answer is only use income from office B to fund the solo 401k, then should I file two separate schedule C's for income tax return? or can I still combine them?
any thoughts and feedbacks are greatly appreciated!
I'm an dentist. 2 years out of residency and 2017 was the first year I started contributing to tax-deferred accounts. I contributed to my solo 401k for 2017 but now I'm second guessing myself.
I work as an independent contractor (1099 income) for a couple offices locally. For simplicity sake, I work at office A and office B. Both A and B have their own LLCs that do business as Gorgeous Smiles, for example Gorgeous Smiles A, Gorgeous Smiles B. Although these offices operate under the umbrella name Gorgeous Smiles, each has its own set of owners. I'm a minority partner at office A. I'm paid as an IC (1099 income) at both offices. In addition I receive W2 (for being board member) and K 1 (owner profit) from office A.
I do not have a separate LLC for my independent contracting work. I filed schedule C for 2016 tax return.
Income (the 1099 income below is close to the exact amount. I'm not listing any W2 or K1 income since I don't think they are relevant in this case)
Office A: 260k 1099 income. Have ownership at A
Office B: 140k 1099 income. No ownership.
Gorgeous Smiles offers 401k to its employees and owners. I chose to set up a solo 401k instead. I could contribute more with my 1099 income and it is way cheaper.
So in 2017 in contributed a total of 54k to solo 401k. BUT then I saw this posted by spiritrider recently and now I'm confused.
“For purposes of section 401, a sole proprietor is considered to be his own employer, and the partnership is considered to be the employer of each of the partners. Thus, an individual partner is not an employer who may establish a qualified plan with respect to his services to the partnership.”
so my questions are:
1. Can I still use the solo 401K instead of the practice's 401k plan? why not?
2. And if not, should that only apply to my 260k income from practice A since that is the only office I have ownership. I can still use the 140K from office B to fund my solo 401K, correct? why not?
3. if only 140K income from office B be used to contribute to solo 401k, then I overfunded my 401 k. Should be less than 54k based on the income of 140k. Is there a penalty to withdraw? and how to amend this with the IRS, which form?
4. If the answer is only use income from office B to fund the solo 401k, then should I file two separate schedule C's for income tax return? or can I still combine them?
any thoughts and feedbacks are greatly appreciated!
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