I have two questions:
(1) For my Self-employed 401(k) plan, if I enter 0 for Employee Contribution and 0 for catch-up contribution, what is the maximum amount I can enter for the Employer Contribution if the net business income is $178,000? I thought the limit for Employer Contribution is 0.25% of the net business income, so it would be $44,500. But TurboTax (2024) lets me enter $63,706 and does not flag an error. Not that since I have 0 for employee contribution and catch-up contribution, the total amount of $63,706 is still below the maximum allowed $69,000.
(2) Instead of the amounts in (1), if I enter $23,000 for employee contribution and $7,500 for catch-up contribution and $33,206 for employer contribution (max allowed), the total is still $63,706 (the same as in (1)). But in this case I end up paying more tax than in (1). Why? Is it because the tax deduction on employer contribution is higher than that on employee contribution?
Thank you.
