Retirement tax questions

@dmertz Thank you so much for taking the time to respond thoughtfully. Your reply has been a big help. I have some follow-up questions:

1. Re: Solo and Roth 401Ks:

The sum of your employee elective deferrals and Roth contributions to the solo 401(k) (traditional or Roth) and the 401(k) at your W-2 employer is $19,500.  This limit is per-individual.  Assuming that you contribute nothing to a plan at your W-2 employer, you can split a total of $19,500 employee elective deferral and employer contributions any way you like between the traditional and Roth accounts in the solo 401(k).

The $57,000 limit is a per-plan limit for employee and employer contributions combined, however your self-employment income of $100,000 is far from the amount that would support that much of a contribution unless your solo 401(k) plan permits after-tax contributions that would take you beyond the $19,500 of elective deferrals and Roth contributions. 

I understand now that the employee (elective deferral) portion of the solo 401K cannot be more than $19,500....so I will contribute (at least) that portion for sure. No further questions here.

2. Re: Solo and Roth 401Ks, you said:

If your solo 401(k) plan does not permit after-tax contributions, the maximum that you will be able to contribute is $38,087 to the solo 401(k) ($19,500 employee and $18,587 employer) and $6,000 nondeductible to a traditional IRA for a total of $44,087.  If your 401(k) plan does permit after tax contributions, add to that the $18,913 that I mentioned earlier.  Depending on the plan rules, you might be able to make a rollover from the after-tax sub-account to a Roth IRA, but you likely will have to leave the other amounts and any earnings on those other amounts in the solo 401(k) until you reach age 59½.

How did you get a value of $18,587? I would really appreciate you sharing the formula you used (assuming my 100K of self-employment / 1099 income).

I looked up the "Contribution limits for self-employed individuals" section at the One-Participant 401(k) Plans article on the IRS website but wasn't able to figure it out. The website says: 

You must make a special computation to figure the maximum amount of elective deferrals and nonelective contributions you can make for yourself. When figuring the contribution, compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both:

• one-half of your self-employment tax, and       (not sure how this is calculated)
• contributions for yourself.     (not sure how this is calculated)

3. The $57,000 limit for 2020 is a per plan limit, not a per individual limit.

I have opened both a solo 401K and a solo Roth 401K. Could I do this?

• Contribute $19,500 to my solo 401K (employee / elective deferral portion)
• Case A: If my solo 401K  does NOT permit after-tax contributions: I will only contribute $18,587 for the Employer nonelective contribution portion into my solo 401K. Can I still contribute an additional $37,500 to my Roth 401K (I imagine the answer is no, but I'm hoping not)?
• Case B: If my solo 401K  permits after-tax contributions: Contribute $18,587 for the Employer nonelective contribution portion into my solo 401K, and contribute the remainder of the $57,000 limit, $18,913 as an after-tax contribution to the traditional account in the solo 401(k). Can I still contribute an additional $37,500 to my Roth 401K (I imagine the answer is no, but I'm hoping not)?

4. Re: Traditional and Roth IRAs, you said:

You have enough compensation to also contribute the maximum $6,000 to a traditional IRA, but with your participation in the solo 401(k) that traditional IRA contribution would be nondeductible because your AGI will be above the limit for deductibility of the traditional IRA contribution.  Your AGI will be too high to be able to contribute to a Roth IRA.

In my case, it appears that $6000 cannot be taken as a deduction. What is the benefit of making a nondeductible contribution to my traditional IRA? A few sub-questions here:

• If I do this, will the earnings still grow tax-free? Will either the original $6000 contribution or it's earnings (when I take the money out at age 72 in the form of distributions) be tax-free?
• Can the $6000 be moved to a Roth IRA in future? Any advantage to doing that?
• Can a Roth-IRA conversion ladder be used in future? Any advantage to doing that?

Thank you for helping me navigate these questions.