Company 401k for only half the year - am I eligible for individual 401k?

[JK]

A question came up from one of my senior co-residents who is entertaining job offers. He is currently a resident and our hospital offers a regular 401k as a W2 employee. He will graduate in June and take a position as an attending, but in the contract he mentioned that he won't have access to the 401k until he has been with the new practice at least 6 months (which will be 2018 then). We were discussing how much he is able to contribute and what the best strategy is?

-Can he max out his 18k portion for the first six months while still a resident (if he has the money to do so) and then setup a solo 401k for the rest of 2017 and contribute to that while an attending? Or does the fact that he did have some access to a regular 401k during the 2017 calendar year make him ineligible for a solo 401k?

[jfoxcpacfp]

JK wrote:

-Can he max out his 18k portion for the first six months while still a resident (if he has the money to do so) and then setup a solo 401k for the rest of 2017 and contribute to that while an attending? Or does the fact that he did have some access to a regular 401k during the 2017 calendar year make him ineligible for a solo 401k?

Click to expand...

1. Yes, he can max out $18k in the 1st job.


2. Yes, he can also set up and contribute to a SOLO-k in 2017, but only if he has some IC income. Will he be moonlighting along with his W2 attending job?

[JK]

No moonlighting. Just working at his regular attending job upon graduation.

1c income?

[TheAbacus]

IC = Independent Contractor

[spiritrider]

In case the OP is not aware of it. There is only one employee elective deferral limit (2017 = $18K) between all qualified plans of all employers. If the full $18K is deferred at the first employer, there is no deferral available at subsequent employer.

As already stated, it is only possible to open and contribute to a solo 401k if there is self-employment or S-Corp 2% shareholder-employee compensation. If the circumstances of the first paragraph exist, only employer contributions would be possible. If self-employment, you can only contribute a maximum of 20% of net self-employment income. If shareholder-employee (W-2), you can only contribute a maximum of 25% of W-2 compensation.