Excess Contribution to Solo 401k

[rynlee]

Hello, I am getting a message from TurboTax that I've made excess contributions to my Solo 401k.  However, the amount that I've entered into TurboTax as employee and employer matching contributions does not, as far as I understand it, exceed 2019 contribution limits.  I have limited the employee contributions to my net income (which is less than $19,000) and the employer contributions to 20% of that income (total is less than $56,000).  What might be going on?

[Critter]

Can I contribute more than I make to the Solo 401k?

No, your contribution limits are based on what you’re earning in your business. You cannot contribute more than you earn, but you can contribute a large chunk of what you earn to get more money into your Solo 401k plan.

[rynlee]

I did not contribute more than I earned, but am getting the message from TT nonetheless.

[rynlee]

I was able to resolve this issue.  thank you.

[alannabarber]

How did you resolve this issue? I am dealing with the same thing.

[ThomasM125]

With a solo 401-K, your contributions can consist of two types of contributions, an elective deferral and employer non-elective contribution. 

The elective deferral can be up to 100 of compensation, and the employer non-elective contribution is up to 25% of compensation. However, in the case of a self-employed individual, compensation is considered to be net self-employment income after deducting 1/2 of self-employment tax and contributions to yourself. That may be why you are over contributing, you may be overstating your self-employment income.