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Changing from W2 to 1099

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  • Changing from W2 to 1099

    I'm planning to change jobs and looking for advice.  I'm currently employed with W2 income, but will likely be taking a job ~6 months from now that is 1099.  Am I able to max out my current retirement accounts (403b and 457b) in the first six months of next year, then max out a Solo 401k in the second six months?


    Other question: are there any good books, threads, or posts you would recommend to get more familiar with how to structure finances under a 1099 income?  All the implications (quarterly taxes, deductions, etc.) of changing to a 1099 are a little daunting and I want to get better informed.  I've done some light reading here on WCI but have a lot more to learn.


  • #2
    There are plenty of threads here on these issues. There are limits, especially with the combination of a 403b and a one-participant 401k.

    There is one combined employee elective contribution limit for all 401k, 403b, SARSEP and SIMPLE IRA plans of all employers. If you maximize the limit (2018 = $18.5K and 2019 = $19K) with the 403b, you can not make such a contribution to a one-participant 401k.

    There is a separate annual addition limit (2018 = $55K and 2019 = $56K) for each unaffiliated employer. A 403b is considered controlled by the participant and must be aggregated with all employer retirement plans > 50% owned by the 403b participant. Your maximum one-participant 401k employer contributions will be the annual addition limit - 403b employee elective contributions - 403b employer contributions - one-participant 401k employee elective contributions.

    The 457b limit is equal to but separate from the employee elective contribution limit. It is only subject to other 457b contributions.