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Can I contribute more than 100% of self-employment income to my solo 401(k)?

I will have $22,000 of self-employment income on Schedule C and no other income. I will contribute the maximum employee deferral of $19,500 to my solo Roth 401k. Per IRS rules, I can also contribute up to 20% of net income as an employer contribution to a solo traditional 401k. Let’s say I do $3,500. But that adds up to $23,000 in total 401k contributions for the year, which is $1,000 more than my total income. Plus, I’m contributing $6,000 in the same year to my Roth IRA, for a grand total of $29,000 in retirement account contributions for the tax year. Can I do this?

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Accepted Solutions

Can I contribute more than 100% of self-employment income to my solo 401(k)?

You can’t contribute more than your taxable compensation for the year. 

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2 Replies

Can I contribute more than 100% of self-employment income to my solo 401(k)?

You can’t contribute more than your taxable compensation for the year. 

Can I contribute more than 100% of self-employment income to my solo 401(k)?

Does taxable compensation appear on any line on Form 1040? I see total income (line 9), AGI (line 11), and taxable income (line 15). Is the calculation total income minus lines 2 through 7?

 

My total income will be close to my total retirement plan contributions this year, so it would be nice if I could calculate an exact number the IRS will be using. 

 

I know how to calculate self-employment income to figure my maximum self-employed retirement plan contributions, if that helps any.

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