If your salary was $20,000, your Social Security and Medicare taxes would be $1,530, leaving $18,470. If you had no more than $470 withheld for income taxes, that would leave a sufficient amount to be able to make an elective deferral of $18,000. (The $20K retained by the S corp does not enter into the calculation.) With a salary of $20,000, no income tax withholding and a $18,000 elective deferral your W-2 would be expected to show:
Box 1 = $2,000
Box 2 = income tax withholding of $470 or less
Box 3 = $20,000
Box 4 = $1,240
Box 5 = $20,000
Box 6 = $290
Box 12 code D = $18,000
Your S corp could make an employer contribution to your 401(k) of up to $5,000.
(Note that the solo 401(k) plan needs to be established under the S corp.)
If the S corp makes a $5,000 employer contribution, that would reduce the income passed through on the Schedule K-1 (Form 1120S) from $20,000 to $15,000 (I think; I'm not sure how the S-corp accounting works given the employer contribution is made the following year).
