Do I add this to the Roth elective deferrals as there is no where to designate this separately?
Thanks!
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That will be fine. That gets the amounts correct.
I read many other posts indicating the employer amount had to be deducted as an expense and the employee would have to pay taxes on it, etc. So I decided to keep it simple and just max the employee contribution rather than do an employer contribution at this time. Still waiting on answers to my other questions so, easier at this point.
Although I don't think that the IRS has provided guidance specific to solo 401(k) contributions, when employers make their matching or profit-sharing contributions to the designated Roth account they are required to take a deduction for the contribution and are required to issue a Form 1099-R to the employee showing the amount in boxes 1 and 2a with code G in box 7, making it taxable to the employee as if it was an In-plan Roth Rollover without regard to any funds in the employee's traditional account in the 401(k).
Following this logic, it would seem to make sense to claim the contribution as a deductible employer contribution as if it was made to the traditional 401(k) account and enter a Form 1099-R as described above. Simply entering it as an elective employee Roth contribution instead could easily create problems with the application of contribution limits.
With a solo 401(k) it generally makes sense to maximize the regular employee contribution first before allocating funds to the employer contribution, so if the total contributions you intend to make will not exceed the permissible employee contribution, you generally would not make any employer contribution.
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