cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

I am a sole proprietorship with a solo 401K., no employees.  When I ask TurboTax to calculate the max solo 401K contribution, it gives me a total of $36,000.  It then says that only $24,000 is deductible.  Not sure which amount to use now, the max contribution number or the max deductible number.  Obviously, the higher contribution results in lower overall tax, but I just want to make sure I'm doing this correctly and not missing anything important.  Thanks.    

1 Best answer

Accepted Solutions
Level 20

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

$24K is the max you can put into a 401K per year ... any more than that will get you in big trouble with the IRS. So even though you have enough income to put in more you are limited to the annual maximum. 

5 Replies
Level 20

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

$24K is the max you can put into a 401K per year ... any more than that will get you in big trouble with the IRS. So even though you have enough income to put in more you are limited to the annual maximum. 

Level 1

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

Thanks.  I was somewhat fooled as Turbo Tax would have let me make a $36,000 contribution and then I would have been in trouble.
Level 20

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

$18,000, plus a catch-up of $6,000 if age 50 or over, is the maximum elective deferral or Roth 401(k) contribution  permitted by an individual across all plans in which the individual participates.  A separate employer contribution is permitted to the solo 401(k) (if net profit is sufficient).  For someone age 50 or over the maximum total to the solo 401(k) cannot exceed $60,000.
Level 20

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

Perhaps TurboTax is telling you that your maximum *employer* contribution is $36,000.  That would be the case if your net profit from self employment was at least $189,890.  $36,000 is the maximum possible employer contribution if you max out your elective deferrals or Roth 401(k) contributions.
Level 20

To maximize my solo 401K contribution, I get a box saying that only part of it is deductible. Not sure if I should use the max amount or the full deductible amount?

I thought about that last night...there is a difference between the employee & employer contribution limitations.