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  • solo 401k

    I know this topic has been covered a few times but I feel like I am not grasping it fully yet. I fully fund my 401k though work (18K) with 50% employer match. I also do locums and have about $60K in 1099 income. Because I fully fund my 401k through work, does this preclude me from opening a solo 401k? Or, because I am my own employer on the locums side of my income, am I still able to open a solo 401k and contribute up to 20% of my 1099 salary?

  • #2
    Short answer: yes you can.

    Long answer: your limit is net business earnings (income minus expenses, Schedule C line 31) minus half of self-employment tax (Schedule SE, long form, line 13), divided by 5 (i.e. 20%). Also, it's too late for a new 401(k) to be opened for 2017, so just do a SEP-IRA for 2017, start a 401(k) for 2018, and rollover the SEP into the 401(k) sometime in 2018 (wouldn't affect backdoor Roth).

    More info: https://www.whitecoatinvestor.com/multiple-401k-rules/

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    • #3
      So my contributions to the solo 401k would be as an employer not an employee? And all total, both 401k's can't exceed 53k?

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      • #4




        So my contributions to the solo 401k would be as an employer not an employee? And all total, both 401k’s can’t exceed 53k?
        Click to expand...


        Yes, your contributions to the solo w/b as an employer. You can contribute up to $55k as a profit-sharing contribution (limited to 20% of net income according to the formula provided above by @dmfa. So hypothetically, your 2 401k's could receive a total of $110k for 2018.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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