A Solo 401(k)—is a One-Participant 401(k)—is a great way to save for retirement if you’re self-employed or own a business and don’t have any full-time employees. Contributions you make to a Solo 401(k) can be deducted from your self-employment income.
It acts and is treated like any other 401(k) plan. Essentially, this plan has the sole owner and sole employee making contributions to the same one plan. This means you will report the total amount (as sole owner and sole employee) contributed as an adjustment on Schedule 1, line 16.
Here’s how to enter your Solo 401(k) contributions in TurboTax (follow the Turbo Tax prompts to correctly enter you contributions):
- Sign in to your TurboTax account
- Open or continue your return if you haven’t already
- Locate the search bar and type self-employed retirement plans (be sure to include the hyphen)
- Select the Jump to link at the top of the search results
- Answer Yes to the question, Did you make a 2022 self-employed retirement plan contribution? This is found on the screen Self-Employed Retirement Plans
- Answer Yes to Did you contribute to an Individual or Roth 401(k) plan?
- On the next screen, enter your Elective Deferrals and any Catch-Up Contributions you made in 2022
- Enter your Employer Matching (Profit Sharing) Contributions for 2022
- Note: There's no Employer Matching box for Roth 401(k)s because any matching employee contributions are pretax
- If you haven’t made all your contributions for the tax year and would like TurboTax to calculate your maximum contributions for the year, check the box next to Maximize Contribution to Individual 401(k) and Continue
- On the Adjusting Self-Employment Income screen, enter any changes you'd like to make to your self-employment income as it’s been calculated by TurboTax (this is rare). Enter a positive number if you’re adding an amount, and a negative number if you’re subtracting
- Select Continue
- If you checked the box next to Maximize Contribution to Individual 401(k), you’ll see Your Self-Employed Retirement Deduction. This screen shows the maximum amount you can contribute to your Solo 401(k) for the tax year
- Answer the questions on the following screens, until you reach Your Retirement Contributions. This is a summary of the contributions you’ve made to your Solo 401(k) during the tax year
- If this page shows an excess contribution, you must withdraw the amount listed by the plan due date or face a tax penalty from the IRS
- If this page shows an amount to contribute by plan due date, you can still contribute the amount listed to your retirement plan before you max out your contributions, provided the due date hasn't already passed.
- If you have any issues click here to contact Turbo Tax for assistance.
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