Maximum retirement contributions for self-employment income in 2025

Forum|Forum|5 months ago
January 11, 2026
1 reply
0 views

Is this right for 2025 or do these limits interact with each other? Say I have $30K of net profit from schedule C. Subtracting half my SE tax, I get $27,881. Can I contribute all of these?:

1. Employer contribution of 20% of $27,881, which is $5,576, to a traditional Solo 401(k).

2. Employee contribution/deferral of $23,500 to a Roth Solo 401(k).

3. Employee contribution of $7,000 to a Roth IRA.

That totals $36,076. Assuming that I can find the cash, can I do all three of these? I created the 401(k)s months ago, so there is no issue with that.

Not A Product Question

Best answer by dmertz

Almost correct. However, total additions to the solo 401(k) are not permitted to exceed your net earnings of $27,881, so with a $23,500 Roth 401(k) contribution your employer contribution to the solo 401(k) is limited to $4,381. Alternatively, you could reduce your employee Roth 401(k) contribution to $22,305 and make the maximum employer contribution of $5,576. Including your Roth IRA contribution, the total contributions would be $34,881. The same earnings that support a Roth 401(k) can also support a Roth IRA contribution. (The same is not true for deductible 401(k) contributions.)

dmertzAnswer

Level 15

Leen1Author

Level 2

Thank you! If you happen to know what part of the tax code or IRS publication supports that correction, I'd appreciate that. (Otherwise, I'll figure it out myself!)

Here's a variation that I am also considering and would like feedback. What if I modify my $30,000 Schedule C net profit by including an expense on Schedule C Line 19 "Pension and profit plans" for $5,656, representing the Employer contribution for me personally, to my traditional solo 401(k)? Then my Schedule C net profit is reduced to $24,344. From that value, I compute SE tax and subtract half of it to get to $22,624 net earnings. I then designate all of that as an Employee deferral. That increases the total for these two contribution to $28,280, which is $399 higher than the total you give. Can I do it this way? (I am assuming that if this is allowed, it doesn't change that I can still give another $7,000 to my Roth IRA, but if that's wrong, please explain.)

Thank you!

dmertz

Level 15

Section 415(c)(1)(B): https://www.law.cornell.edu/uscode/text/26/415#c

Retirement contributions for the self-employed individual are not permitted to be reported on Schedule C. Line 19 of Schedule C is only for employer contributions made to the accounts of non-owner employees. (Of course if you have non-owner employees other than a spouse, you are not permitted to have a solo 401(k), so in your case nothing is permitted to be included on Line 19.)