dmertz
Level 15
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Retirement tax questions

Contributions to the Solo 401(k) are not permitted to exceed your net earnings from self-employment.  Net earnings are net profit minus the deductible portion of self-employment taxes.  With $7,000 of net profit, your net earnings are $6,505 (assuming that you do not also have W-2 income that would result in your total compensation exceeding the Social Security wage base).  That means that the maximum employee Roth contribution to the Solo 401(k) would be $6,505.

 

TurboTax is incapable of flagging an excess contribution to the Solo 401(k) that is excess only because the contribution exceeds net earnings (the section 415(c) per-plan limit) .  It only checks the entry against the elective-deferral limit (the section 402(g) per-individual limit)

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