I want to contribute the max to a SOLO 401K as an independent contractor. TY 2022. I put in:
$3500 as employee elective deferral
$6500 as employee elective deferral catch up contribution (over50)
for a total of $10K AND
I put in $31K as employer nonelective contribution
So the total is $41K of retirement investments. TurboTax does NOT flag this as a problem! But I know there is some 25% of "compensation" rule for the employers limit on contributions. But it is passing the error check! I like the results but is it legal?
So what "compensation" do I multiply the 25% limit times, to get the max limit??? My total 1099 NEC was 86250. TTax says my business income is $78451. Is it one of these? And does the resulting limit apply only to the employer nonelective contribution (the $31K) or does the limit apply to all contributions (the $41K)
Finally, can I safely do a "self employment adjustment " on the form in TurboTax to increase my "self employment compensation" so that I can contribute what I plan?
Please help!
