This year I will have been self-employed and employed by a corporation and I will be using both a Solo401k and a Corporate 401K. I believe the total defined qualified limit is something like $76,500 (over 50) and that my regular 401k contribution can't exceed $23,000 plus catchup combined between both. I also understand that the Employer matching is NOT combined. My question is do both of the employer matching BOTH contribute to the $76,500 limit?
The regular 401(k) addition limit is $69,000 limit is per employer. The $7,500 catch-up contribution limit is an individual's limit which can be split between the two employers to be applied on top of the regular elective deferral limit of $23,000. Absent any after-tax employee contributions, your maximum permissible combined contributions would be accomplished if you make the maximum elective deferrals, including the maximum catch-up, to the corporate 401(k) plan, with the additions limit at that employer being $76,500, and make the maximum permissible employer contribution to the solo 401(k) with the additions limit to the solo 401(k) being $69,000. Of course to be eligible to make a $69,000 employer contribution you would need $345,000 of net earnings. Net earnings from self employment are net profit minus the deductible portion of self-employment taxes. Plan permitting, after-tax contributions could be made to bring the total additions up the the $76,500 and $69,000 maximums.
(I'm also assuming that you have no significant ownership or control interest in the corporation that would require the two businesses to be treat as a controlled group which would require the two businesses to be treated as a single employer for the purpose of a retirement plan which would preclude establishing a solo 401(k).)
I will double check with an expert @dmertz , but I believe the $76,500 is the absolute ultimate limit of contributions from all sources (employee deferred, employer, and self-employed).
Thanks and All sources I assume includes the annual traditional IRA?
@checkyourmirrors wrote:
Thanks and All sources I assume includes the annual traditional IRA?
IRAs are completely different and covered under different laws. The $76,500 overall limit (as well as the various sub-limits for elective deferrals) applies to qualified workplace plans listed here.
IRAs (traditional or Roth) have a separate limit and rules. You can max out your workplace plans and also max out your IRA (however, subject to the contribution limits for Roth IRAs and the deduction limits for traditional IRAs that apply to everyone).
The regular 401(k) addition limit is $69,000 limit is per employer. The $7,500 catch-up contribution limit is an individual's limit which can be split between the two employers to be applied on top of the regular elective deferral limit of $23,000. Absent any after-tax employee contributions, your maximum permissible combined contributions would be accomplished if you make the maximum elective deferrals, including the maximum catch-up, to the corporate 401(k) plan, with the additions limit at that employer being $76,500, and make the maximum permissible employer contribution to the solo 401(k) with the additions limit to the solo 401(k) being $69,000. Of course to be eligible to make a $69,000 employer contribution you would need $345,000 of net earnings. Net earnings from self employment are net profit minus the deductible portion of self-employment taxes. Plan permitting, after-tax contributions could be made to bring the total additions up the the $76,500 and $69,000 maximums.
(I'm also assuming that you have no significant ownership or control interest in the corporation that would require the two businesses to be treat as a controlled group which would require the two businesses to be treated as a single employer for the purpose of a retirement plan which would preclude establishing a solo 401(k).)