Maximizing contributions to Corporate 401k and Individual 401k

[klw085]

Hello.

I have W2 income and a 401k through work that is maxed out for 2018.  This includes the 18,500 from my personal deferral and the remainder of 56k through employer profit sharing.

I also had about 20k in 1099 profit with which I have an individual 401k.  I assume I cannot defer another 18,500 as an elective deferral, but I assume that I can defer another 4k as employer contribution based on the 20% limit.

However, Turbotax is saying that I can defer pretty much the entire 20k into the individual 401k.  It's as if it is not aware that I already deferred the max 18,500 through my W2 employer account.

Am I correct in thinking that I cannot electively defer any more (beyond 18,500) or is Turbotax correct in that I can since the income is 1099 income?

[dmertz · Accepted solution]

This is a calculation that TurboTax is incapable of handling directly.  Since you've already maxed out your elective deferral at your W-2 employer, you can cause TurboTax to calculate only the employer contribution you can make to your individual IRA by marking the Maximize box for a SEP-IRA contribution or a Profit Sharing Keogh contribution instead of making any entries on the Individual 401(k) page.

[klw085]

I guess I will just allow TT to make the calculation on the SEP line and then contribute what it says to the individual 401k as the employer contribution.