Solved: Solo 401K with a Solo Roth 401K and MEGA Backdoor Roth

kp79 · Oct 10, 2020 3:02:52 PM

In 2020, I have worked as both a sole proprietor / individual contractor with no employees and as a W2 part-time employee. I am 41 yrs old (under 50) and will have multiple streams of income in 2020:<UL><LI>$100K from 1099 contract work as a sole proprietor / individual contractor (from Jan 1-Apr 31)</LI><LI>$60K from a W2 as a part-time employee (projected through the entire year from Jan 1-Dec 31)</LI><LI>$85K in taxable short-term gains from stocks, dividends, and other investment income (projected through the entire year from Jan 1-Dec 31)</LI><LI>Projected Total Income for 2020: $245K from all income streams</LI></UL> I currently have 4 retirement accounts open:<UL><LI>a Solo (Individual) 401K (new account, balance: $0)</LI><LI>a Solo (Individual) Roth 401K (new account, balance: $0)</LI><LI>a Traditional IRA (existing account, balance: $280,000 of which $40,000 is in gains in 2020)</LI><LI>a Roth IRA (existing account, balance: $118,000 of which $18,000 is in gains in 2020)</LI></UL> I would like to maximize my tax deductions this year and move as much money as possible into both after-tax and tax-deferred accounts. My question includes:<OL><LI>Can I contribute up to a max of $57K (employee + employer portion) to my Solo (Individual) 401K AND a separate amount to my Solo (Individual) Roth 401K ? Is the max contribution limit of $57k total across BOTH the solo 401K and solo Roth 401K? Otherwise, what is the contribution limit on the Roth 401K? </LI><LI>Can I either:<UL><LI>(Ideally) Contribute up to a max of $57K (employee + employer portion) to my Solo (Individual) 401K AND an additional $37,500 to a Mega Backdoor Roth? Or...</LI><LI>Contribute up to a max of $57K (employee + employer portion) to my Solo (Individual) 401K AND an additional $6,000 to a "regular" Roth? Or...</LI><LI>Contribute up to a max of $57K (employee + employer portion) to my Solo (Individual) 401K AND an additional $6,000 to a Traditional IRA?</LI></UL></LI></OL>What can and can't i do? My goal is to deduct / defer the maximum amount possible. Note: I tried to do my research before asking this question. Here are some of the links I read:<UL><LI><A href="https://ttlc.intuit.com/community/other-financial-discussions/discussion/solo-401k-and-mega-backdoor-roth/00/1221029" target="_blank">https://ttlc.intuit.com/community/other-financial-discussions/discussion/solo-401k-and-mega-backdoor-roth/00/1221029</A></LI><LI><A href="https://www.nerdwallet.com/article/investing/what-is-a-solo-401k" target="_blank" rel="nofollow noopener noreferrer">https://www.nerdwallet.com/article/investing/what-is-a-solo-401k</A></LI><LI><A href="https://www.nerdwallet.com/blog/investing/mega-backdoor-roths-work/" target="_blank" rel="nofollow noopener noreferrer">https://www.nerdwallet.com/blog/investing/mega-backdoor-roths-work/</A></LI><LI><A href="https://www.irs.gov/publications/p590a" target="_blank" rel="nofollow noopener noreferrer">https://www.irs.gov/publications/p590a</A> (I did not read the entire thing and got lost in the middle)</LI><LI><A href="https://www.kiplinger.com/article/retirement/t001-c000-s001-how-much-can-you-contribute-to-a-solo-401-k-2020.html" target="_blank" rel="nofollow noopener noreferrer">https://www.kiplinger.com/article/retirement/t001-c000-s001-how-much-can-you-contribute-to-a-solo-401-k-2020.html</A></LI><LI><A href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits" target="_blank" rel="nofollow noopener noreferrer">https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits</A></LI></UL> Thanks for any help with this.