I am a sole proprietor and have a Solo 401k retirement account. This type of retirement account allows for employee (elective deferrals) and employer (profit sharing contribution) contributions. In this case I am both the employee and the employer because I am a sole proprietor. I made the maximum $19,500 "employee" elective deferral as well as an "employer" contribution. The elective deferral lowered my federal and state tax burden. However, when I enter the profit sharing contribution I see no tax benefit for federal tax purposes (i.e. this does not lower the amount that I owe, according to TurboTax). However, the profit sharing contribution does lower my state tax burden. I've already calculated the non-elective contribution limit for profit sharing purposes and I am under the limit, but see no federal tax benefit when entering the employer matching (profit sharing) contribution in TurboTax. Any help would be appreciated.
