topic IRA and Solo 401k Contributions in Deductions & credits

IRA and Solo 401k Contributions

mrtk31 — Mon, 09 Mar 2026 06:01:02 GMT

the IRS uses the term "taxable compensation for the year" so on my tax return is that number the "total income" or is it the "adjusted gross income"

I don't want to get into trouble and contribute too much. All of my income is 1099 income.

thanks for any help!

Re: IRA and Solo 401k Contributions

VolvoGirl — Wed, 16 Feb 2022 03:27:03 GMT

For an IRA contribution. If you only have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes. But not over the max 7,000. See IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590a.pdf

So check 1040 Schedule 1 line 15. You have to deduct that amount from your Schedule C Net Profit. That will give you the allowed contribution for the 1099NEC income.

Re: IRA and Solo 401k Contributions

DawnC — Wed, 16 Feb 2022 03:51:14 GMT

Neither. Both of those line items can and usually do contain income not considered compensation. If all of your income comes from self-employment 1099s, your taxable compensation is your business net profit, Schedule 1, Line 3 less self-employment tax deduction which is on Line 15 of Schedule 1. TurboTax can calculate your maximum contribution for you.

Once your self-employment income is entered:

In your return, type SEP IRA contributions (use the whole phrase) in the Search box.
Select the Jump to link at the top of the search results.
This will take you to the Self-Employed Retirement Plans screen.
- If you get a message that Self-Employed Retirement Plans are only for self-employed individuals, this means that you haven't entered any self-employed income.
TurboTax will ask you whether you contributed to different types of retirement plans. Select Yes to Solo or Roth 401k.
Check the box to Maximize Contribution to Individual 401k.
Click Continue.

Re: IRA and Solo 401k Contributions

mrtk31 — Wed, 16 Feb 2022 03:57:19 GMT

thanks for the help, I'm just so confused

I'm using turbotax self employed live, I can't see a formal schedule C.

If you could just help me where to look to find this information on my net earnings.

I also have another expense from a side thing I started that hasn't gotten to the point of earned income yet that is about $7,000 I spent last year that I included on my self employment income/expenses.

I just wish there was a way I could see how much I am allowed to put into IRA/Solo 401k without getting into trouble

Re: IRA and Solo 401k Contributions

mrtk31 — Wed, 16 Feb 2022 03:59:18 GMT

I just realized I responded and did not notice Dawn's post which I'm reading now

Re: IRA and Solo 401k Contributions

mrtk31 — Wed, 16 Feb 2022 04:08:11 GMT

thank you so much Dawn!

so if the number is $16,000 that turbotax says my maximum contribution to a solo 401k plan, and I have contributed $6,000 already to a Roth IRA (which comes first in my retirement strategy), then that means I would only have $10,000 possible contribution to my solo 401k plan without getting into trouble?

Re: IRA and Solo 401k Contributions

DianeW777 — Wed, 16 Feb 2022 15:03:35 GMT

You may not have the current (tax year 2021) allowable limit.

Contribution limits in a one-participant 401(k) plan (Solo)

The business owner wears two hats in a 401(k) plan: employee and employer. Contributions can be made to the plan in both capacities. The owner can contribute both:

Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit:
- $20,500 in 2022 ($19,500 in 2020 and 2021), or $27,000 in 2022 ($26,000 in 2020 and 2021) if age 50 or over; plus
Employer nonelective contributions up to:
- 25% of compensation as defined by the plan, or
- for self-employed individuals, see discussion below

If you’ve exceeded the limit for elective deferrals in your 401(k) plan, find out how to correct this mistake.

Re: IRA and Solo 401k Contributions

mrtk31 — Wed, 16 Feb 2022 16:48:21 GMT

yes I understand how the solo 401k contributions limits work but that is not my question

my question is specifically can my solo 401k contribution + roth ira contrubtion > earned income?

which sounds kind of weird because how can I contribute more than my earned income.

Re: IRA and Solo 401k Contributions

DianeW777 — Wed, 16 Feb 2022 17:03:36 GMT

No, Solo 401(k) contributions are based net income from self-employment (i.e. you can't contribute more than you make).

The owner can contribute both: Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit: $20,500 in 2022 ($19,500 in 2020 and 2021), or $27,000 in 2022 ($26,000 in 2020 and 2021) if age 50 or over.

Re: IRA and Solo 401k Contributions

mrtk31 — Wed, 16 Feb 2022 18:37:10 GMT

you answered a question I did not ask

I am NOT asking if I can contribute more than my earned income to my solo 401k

I AM ASKING if my solo 401k contribution + roth ira contribution can be more than my earned income, because both added together are MORE

Re: IRA and Solo 401k Contributions

RaifH — Wed, 16 Feb 2022 19:19:37 GMT

No, if you defer all your self-employment income into a Solo 401(k), you would not show any taxable income for the year. Without any earned income, you cannot contribute to a Roth IRA.

According to the IRS, your contribution limit is the lesser of:

$6,000 ($7,000 if you are age 50 or older) minus all contributions (other than employer contributions under a SEP or SIMPLE IRA plan) for the year to all IRAs other than Roth IRAs, or
Your taxable compensation

Re: IRA and Solo 401k Contributions

mrtk31 — Wed, 16 Feb 2022 23:20:34 GMT

I should have been more clear.

The solo 401k can have tax deferred contributions and taxable (roth) contributions

The majority of my solo 401k contribution was Roth 401k.

is the answer still "no"?

Re: IRA and Solo 401k Contributions

AmyC — Wed, 16 Feb 2022 23:49:22 GMT

If your compensation is below $58,000, you can. Just be sure the nontaxed portion meets all those separate requirements.* There are income limitations to consider. and can be viewed in 401(k) and Profit-Sharing Plan Contribution Limits. As to contributions, it states:

The annual additions paid to a participant’s account cannot exceed the lesser of:

100% of the participant's compensation, or
$58,000 ($64,500 including catch-up contributions) for 2021; $57,000 ($63,500 including catch-up contributions) for 2020.
However, an employer’s deduction for contributions to a defined contribution plan (profit-sharing plan or money purchase pension plan) cannot be more than 25% of the compensation paid (or accrued) during the year to eligible employees participating in the plan (see Employer Deduction in Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).

There are separate, smaller limits for SIMPLE 401(k) plans.

Re: IRA and Solo 401k Contributions

mrtk31 — Fri, 18 Feb 2022 02:54:24 GMT

ok so now we have a "yes" thank you for that

is there a reason the irs allows me to contribute money to my retirement accounts (solo roth 401k and roth ira) that exceeds the money I made for the year?

how is that even possible?

should I just accept that the irs is a bunch of idiots and can't do math and forget about it?

also why did 3 people say "no" and now you say "yes" I'm beginning to question the "expert" tag applied to your guys names on here

Re: IRA and Solo 401k Contributions

mrtk31 — Thu, 17 Feb 2022 13:03:29 GMT

bump

Re: IRA and Solo 401k Contributions

RobertB4444 — Thu, 17 Feb 2022 20:09:36 GMT

The $58,000 limit is there to allow you to make 'catch up contributions' to your plan. If you made less than $58,000 then you can contribute more than you made.

Re: IRA and Solo 401k Contributions

mrtk31 — Fri, 18 Feb 2022 02:52:58 GMT

my question has nothing to do with the "limit" obviously you are wasting more of everyone's time reading this because you chose not to read the question

Re: IRA and Solo 401k Contributions

DaveF1006 — Mon, 21 Feb 2022 21:03:18 GMT

This is an edit to my previous post made. I apologize for your frustration and I will address your original question on the way it was intended assuming my interpretation is correct. To answer your original question, I referenced the following Turbo Tax link.

To determine the contribution limit, the income used to determine the limit is Modified Adjusted Gross Income (MAGI). Your AGI calculation is defined in the link above as total income minus adjustments. The adjustments are listed in the link and the amount is listed on Line 11 of your 1040.

Now your MAGI is not listed on your 1040 but is used in a variety of calculations. Most notable are determining your income limit for contributing to certain retirement plans. Most the time, the AGI and MAGI are the same but in rare instances, it isn't. Magi includes the following add backs to AGI such as:

Student loan interest
One-half of self-employment tax
Qualified tuition expenses
Tuition and fees deduction
Passive loss or passive income
IRA contributions
Non-taxable social security payments
The exclusion for income from U.S. savings bonds
Foreign earned income exclusion
Foreign housing exclusion or deduction
The exclusion under 137 for adoption expenses
Rental losses
Any overall loss from a publicly traded partnership

If you have any of these, then your contribution to your retirement plan maybe further restricted. If not, then your AGI and MAGI is the same.

[ Edited 02/21/22| PST]

@mrtk31

Re: IRA and Solo 401k Contributions

mrtk31 — Sun, 20 Feb 2022 20:22:05 GMT

To be more clear not every response in this thread was done by an idiot who clearly gave incorrect information.

but instead of worrying about giving numbers to questions I think you should focus on removing the "experts" who gave incorrect information telling me I cannot contribute more than my earned income, when in fact I can.

Re: IRA and Solo 401k Contributions

Linprell — Sun, 27 Mar 2022 15:19:24 GMT

Why is Turbo Tax adding my Solo 401K Roth Elective contribution in on Schedule 1 adjustments to income ? Since it is not deductible it should not appear? This is making my taxable income less than it should be