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Solo 401k 2022 employer matching contributions

I am no tax expert, but I think there may be a mistake in the Home & Business version of 2022 TurboTax. It is my understanding that the SECURE 2.0 Act now makes it possible for employers to make matching contributions to employees' Roth 401(k)s. Unlike many provisions of the new law, this went into effect immediately upon passage of the act.

 

My issue is, under TurboTax Home and Business version, Business Income and Expenses - Individual and Roth 401k Plans, the software only allows you to enter the Employee Matching (Profit Sharing) Contributions under the Individual 401k, not Roth 401k.  If I understand the SECURE Act II correctly, the option for an employer to deposit their contribution into either traditional or Roth 401k was created, effective on passage of the Act, so it should be an option for the 2022 tax year.

 

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1 Reply
AliciaP1
Expert Alumni

Solo 401k 2022 employer matching contributions

No, your business can match your Roth 401(k) contributions, but they must be designated to a traditional (pre-tax) 401(k) since the contributions are tax deductible to the business.

 

Per the IRS:

...your employer can make matching contributions on your designated Roth contributions. However, your employer can only allocate your designated Roth contributions to your designated Roth account. Your employer must allocate any contributions to match designated Roth contributions into a pre-tax account, just like matching contributions on traditional, pre-tax elective contributions.

 

See Retirement Plans FAQs on Designated Roth Accounts for more information.

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