For self employed people: Gross income-expense= net profit
Earned income=netprofit- self employment tax/2
The employee contribution limit for one-participant 401(k) plans in 2024 is $23,000. The limit for employer contributions is up to 25% of compensation. Because I am self-employed, I can contribute both as the employer and the employee.
My question is: What is the maximum amount I can contribute to a Solo 401(k)? Is the limit for the employee portion less than or equal to my earned income assuming it's less than or equal to 23,000? What is the limit for employer portion is it 25% of net profit or 25% of gross income?
Thanks in advance for helping me with this.
