TurboTax properly implements the worksheet from Chapter 5 of IRS Pub 560.
Someone who is self-employed is permitted an employer contribution to a solo 401(k) of no more than 20% of net earnings. Net earnings are net profit minus the deductible portion of self-employment taxes.
The regular elective deferral can be no more the $22,500 for 2023. If over age 50, a catch-up contribution of up to $7,500 can be made, entered in the separate box for catch-up contributions. Employer contributions are to be entered into a third box specifically for employer matching or profit sharing contributions.
The summary displayed by TurboTax is really confusing. Examine TurboTax's Keogh, SEP and SIMPLE Contribution Worksheet (TurboTax's implementation of the worksheet from Pub 560) instead.
