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Level 1

Does TurboTax not correctly calculate the maximum solo 401k contribution if you also have a W-2 employer 401k?

I'm looking at either a SEP IRA or a solo 401k plan to reduce taxes on the income I get from my single-member LLC side business (I also am a W-2 employee of a different company).   I already max out my 401k contributions at my W-2 employer.  Because the maximum employee contribution is aggregated across all 401k plans, I believe that for a solo 401k the only contribution I could make is the employer profit sharing amount, which would be the same as the maximum SEP IRA contribution (roughly 20% of the single member LLC income).  However, when I run the numbers in TurboTax and select "maximize contribution" it says that for 2018 my max contribution to a solo 401k would have been substantially higher than the SEP IRA amount.  It looks like it is ignoring the fact that I contribute to another 401k.  Does TurboTax not correctly calculate the maximum solo 401k contribution if you have a separate W-2 employer 401k?

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Level 20

Does TurboTax not correctly calculate the maximum solo 401k contribution if you also have a W-2 employer 401k?

You are correct, this is an unsupported calculation.  Since you've already made the maximum permissible elective deferrals at your W-2 employer, you can only make an employer contribution to the solo 401(k).  To allow TurboTax to calculate only the maximum permissible employer contribution you must select the Maximize box for either a Profit Sharing Keogh or a SEP contribution.  The result will be the same as for an employer-only contribution to the solo 401(k).

4 Replies
Level 20

Does TurboTax not correctly calculate the maximum solo 401k contribution if you also have a W-2 employer 401k?

You are correct, this is an unsupported calculation.  Since you've already made the maximum permissible elective deferrals at your W-2 employer, you can only make an employer contribution to the solo 401(k).  To allow TurboTax to calculate only the maximum permissible employer contribution you must select the Maximize box for either a Profit Sharing Keogh or a SEP contribution.  The result will be the same as for an employer-only contribution to the solo 401(k).

Level 1

Does TurboTax not correctly calculate the maximum solo 401k contribution if you also have a W-2 employer 401k?

Where can I select Max box for only the Profit Sharing Keith or a SEP contribution?  I only have one box that is maximize the 401K contribution.
Level 1

Does TurboTax not correctly calculate the maximum solo 401k contribution if you also have a W-2 employer 401k?

I found it.  Never mind.  Once I select that I want to contribute SEP or Profit Sharing Keogh, it allows me to maximize them.
Level 20

Does TurboTax not correctly calculate the maximum solo 401k contribution if you also have a W-2 employer 401k?

Yup, that's it.