topic Re: 401K contribution in Retirement tax questions

401K contribution

JeffDIY — Tue, 10 Feb 2026 10:50:21 GMT

I want to contribute the maximum amount to my self employed individual 401K plan. According to IRS publication 560, it appears I can contribute $22,500 plus $7500 catch-up (I am over 50). Also an additional employer contribution- not sure what this amount is.

My total compensation was $37,012 and my net income was $23,673.

I am trying to enter these amounts into TurboTax and it appears that the maximum amount allowed is $22,000 (not $22,500) and the catchup amount is not allowed. What am I doing wrong?

Re: 401K contribution

dmertz — Sat, 24 Feb 2024 22:56:22 GMT

The maximum that you can contribute is your net profit of $23,673 minus the deductible portion of self-employment taxes, $1,673. That leaves $22,000 as the maximum permissible 401(k) contribution which would end up being all regular employee deferral or Roth contribution.

The fact that it works out to such a round number, exactly $22,000, makes this sound like a homework question.

Re: 401K contribution

JeffDIY — Sun, 25 Feb 2024 18:19:43 GMT

Thank you for the information. I did not realize that the contribution was based of business net profits rather gross income. It is truly a coincidence that the number turned out even- I even made a slight adjustment to the profit to double check. The round $22,000 number through me off track- thinking the program had the wrong parameters.

My follow up question is- can I make an additional employer contribution. If so- how much is allowed?

Re: 401K contribution

dmertz — Sun, 25 Feb 2024 19:59:24 GMT

$22,000 is the maximum permissible amount of total "additions" to the 401(k), either employee or employer.