2016 Tax Report Article Question

[darnabeel]

In the 2016 tax report article, 53k is contributed to both a partnership 401(k)/profit sharing plan and 53k is contributed to an individual 401(k) plan. How does that work?

Doesn't the IRS limit to 18k all employee contributions to all 401(k) plans combined?

 

 

[jfoxcpacfp]

darnabeel wrote:

In the 2016 tax report article, 53k is contributed to both a partnership 401(k)/profit sharing plan and 53k is contributed to an individual 401(k) plan. How does that work?

Doesn’t the IRS limit to 18k all employee contributions to all 401(k) plans combined?

Click to expand...

You are limited to an $18k employee discretionary contribution across all plans ($24k if age 50+). That means, you can contribute that amount without regard to a % limitation, as long as you earn at least that much. Beyond that, you can contribute $53k into another plan as a % of your income. Iow, if you make $265k, 20% of that amount, or $53k, can be contributed to your SOLO-k as a profit-sharing contribution.

[The White Coat Investor]

I saw your comment on the blog, but if you see it here first, here are some relevant links:

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

https://www.whitecoatinvestor.com/why-i-gave-my-business-away/