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Deductions & credits
Since you treat yourself as an employee, your contribution limit is $22,500 in 2023 or if you are 50 or over, the amount is $30,000. In addition, your business may make a match up to 25% of your compensation for the year to your plan. This would be 25% of $70,000. Compensation is defined as gross income according to IRS definitions.
Now let's determine what your maximum contribution limit is for 2023.
- If you are 50 or under, you limit is $22,500 plus 25% of $70,000 or $17,500. In this case, your total contribution limit is $40,000. ($22,500 + $17,500).
- At 50 or older, add the catchup contribution of $7500 thus the limit is $47,500.
Turbo Tax will calculate what the total contribution amount should be and will warn you of the fact that an excess contribution has been made.
Contribution Limits to a one Participant 401K Plan
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‎February 12, 2024
7:12 AM