Business -- solo/individual 401(k) guidance isn't consistent in amount that can be contributed

[SerottaD]

 Once you exit the business pages, TurboTax says

     Self-employed retirement deduction

     Using the maximum allowable contribution, you can defer a maximum of $24,701 to a 401(k) plan.

But on another page TurboTax says

      Your retirement contributions

      Here are your self-employed retirement deductions using the maximum allowable contribution.

     Note: The maximum you can defer to all your 401(k) plans is $31,000, and you can put more into your plan

                 as profit sharing.

  Bob Jane

Individual 401(k)	$25,902	$0
Amount contributed	$25,902	$0
Maximum allowed to qualified plans	$25,902

It is not clear why these numbers are different.

How do you confirm what is the correct number. Maximum deduction where the last dollar reduces taxes. Not interested this year in extra deduction if the "extra" doesn't reduce taxes.

[AmyC]

Let's break it down:

• The $24,701 Figure: This is your Actual Calculated employee Limit based on your net business profit. For a Solo 401(k), you cannot contribute more than your "earned income," which is defined as: Net Profit - 1/2 Self-Employment Tax = Earned Income
• The $25,902 Figure: This includes a small "Profit Sharing" (employer) component. TurboTax often calculates the employee deferral first, then sees if there is any "room" left in your earned income to allow for an employer contribution - capped at 20% of your adjusted net profit.

Final thought: 401K limits are across all plans for the year so if you have a w2 job with 401k, those contributions need to be accounted for in the big picture. Your screen shows $31,000 total for  employee your age.

[SerottaD]

The software needs an upgrade in this area to explain the "so what" as you have.  Employee contribution (and the formula!) and then employer contribution.