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Combined W2 and 1099 - Retirement Question

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  • Combined W2 and 1099 - Retirement Question

    I know this subject has been addressed, but my situation is a bit different.  I have two jobs, one as a w2 employee and one as a 1099 contractor.  My w2 employer does not offer any 401k benefits.  I make about $300-400k through my w2 and about $100k through my 1099 contractor.  How do I max out my 401k.  As of right now I have an LLC taxed as an S-corp.

    I can't think of a scenario where I'll even reach the $53k annual limit.

    There is only $100k I can work with, and as an S-corp I'd have to pay myself a salary. I'll probably have to reorganize as an LLC taxed a proprietor. Then take 25% into a solo-K which would only give me $25k annually.

    What do you guys think?

  • #2
    One problem is that, as an S-corp, if you are taking money out of the business, you should be filing payroll taxes, anyway.

    Until you grow your SE income, you are correct that you're limited to $25k. You can still do a back-door Roth and then grow a taxable account, not the worst problem in the world. There are many benefits to a taxable account, one being lower tax rate on long-term capital gains and dividend.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087