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Understanding solo 401k limits in context of profit sharing and backdoor roth

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  • Understanding solo 401k limits in context of profit sharing and backdoor roth

    I am currently a W2 employee with no 401k but part of a profit share that will give me somewhere between 10-40k per year.

    I am also a 1099 with a different group from my primary employer and will make around 80k/yr with this group.

    I also want to max out my roth IRA via backdoor method.

    If I put 1099 earnings in to a solo 401k I assume I am allowed to do 19.5k (employee contribution) + 20000 (25% of 80k)--does this reduce my allowed contribution to a traditional IRA (that I then convert to roth)? Does this overlap with my unrelated profit share that might put me over my annual 401k limit? I won't find out the profit share amount until Feb next year and can wait to do my 1099 contributions until after that if they interfere with each other but it is a bit unclear if these are unrelated enterprises if they have the same limit applied.

  • #2
    The maximum self-employed employer contribution is 20% of your net earnings from self-employment (earned income) = business profit - 1/2 SE tax.

    Each unaffiliated employer has a separate annual addition limit (2021 = $58K).

    The 401k and IRA contribution limits are separate.

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    • #3
      Originally posted by spiritrider View Post
      The maximum self-employed employer contribution is 20% of your net earnings from self-employment (earned income) = business profit - 1/2 SE tax.

      Each unaffiliated employer has a separate annual addition limit (2021 = $58K).

      The 401k and IRA contribution limits are separate.
      Thanks for the response. So my IC gig 58k contribution is separate from the profit share at my w2 job?

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      • #4
        Yes

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