topic Retirement contribution allocation for business in Self employed

Retirement contribution allocation for business

Vladimir101 — Mon, 09 Mar 2026 08:50:37 GMT

I created an individual 401k plan for my consulting service. TurboTax calculated the maximum amount allowed to this plan, and I use that amount for the contribution.

But later is shows the screen Retirement Contribution Allocation with the field Amount of Contribution Attributed To This Business. I do not have any other business. I noticed taht if I put the amount less than maximum in that field, TurboTax gives me a higher refund. What should I put there?

Thanks

Re: Retirement contribution allocation for business

GeorgeM777 — Tue, 08 Mar 2022 01:50:03 GMT

Entirely up to you what you enter as your 401k contribution, subject to the applicable limits. Because the option to maximize contribution to individual 401k is on the same page where you enter your actual 401k contribution, you can see what happens to your refund amount if you choose to maximize. If you prefer the higher refund, modify your 401k contribution accordingly. However, if you prefer to keep the funds and receive a smaller refund, then choose that option.

@Vladimir101

Re: Retirement contribution allocation for business

Vladimir101 — Tue, 08 Mar 2022 08:08:55 GMT

My question was a bit different.

I put maximum amount for elective deferrals ($14,755 allowed by TurboTax) in Individual 401(k) plan on the Individual and Roth 401 (k) Plans screen.

Then, TurboTax shows $1,511 federal refund.

After a few screens, TurboTax opens the Retirement Contribution Allocation screen with the field Amount of Contribution Attributed To This Business. It states "Enter the amount of your $14,755 Keogh, SEP, SIMPLE or 401(k) plan contribution deduction attributable to <my business name>".

If I enter $14,755, it reduces the refund to $1,186.

What should I enter in the Amount of Contribution Attributed To This Business?

Can I put a smaller amount there than I put for elective deferrals (self-employed retirement deduction)?

I noticed that if I put $0 in the Amount of Contribution Attributed To This Business, schedule 1 includes Self-employed health insurance deduction $3,287. If I put $14,755 there, Self-employed health insurance deduction disappears from Schedule 1 Adjustments to Income.

Re: Retirement contribution allocation for business

RobertB4444 — Fri, 11 Mar 2022 04:35:08 GMT

@Vladimir101 Your self-employed health insurance deduction is limited to your net schedule C income minus one half of your self employment tax minus your retirement contribution.

So your retirement contribution is wiping out your health insurance deduction.

You do have to associate your retirement plan contribution with your business but you can reduce your contribution amount to increase your refund if you like. Play with the different contribution amounts until you get the deduction for both and see if that contribution amount will work for you.

Re: Retirement contribution allocation for business

tsunghua — Sun, 10 Apr 2022 06:49:33 GMT

I use TT Deluxe. On the screen entitled "Retirement Contribution Allocation", it asks to "Enter the amount of your $21,311 Keogh, SEP, SIMPLE or 401(K) plan contribution deduction attributable to Consultation," where $21,311 is my net business income minus deductible self-employment tax , and "Consultation" is my business. My self-employed health insurance deduction amount is $18,606, although I am not sure whether this piece of information would be relevant to my question below.

Please help me understand ... what does the amount I enter in this question actually mean practically? Is it that I could contribute only that amount to my individual 401(k) plan? Or, does it mean I could contribute $21,311 regardless of what amount I enter into the box?

I tried different answers. The federal tax due is the smallest when I answered with any amount between $0 and $365 in the box. Choosing any amount above $365 increased the federal tax due; and the larger amount the greater the tax.

Thank you in advance for your help.

Re: Retirement contribution allocation for business

midpitts — Thu, 28 Dec 2023 19:20:34 GMT

My question is do I just put the employee contribution amount or the total with the employer contribution for the question of the amount of the contribution that is attributed to my business?