I have both w-2 income and 1099 income. Can I still contribute to a solo-401k

[MsLeslie]

Hi! This year I will receive FTE income on a w-2 as well as freelancer income on 1099. Will this affect any contributions I can make to my Solo 401k? Would I be able to contribute all 1099 income straight to my solo 401k tax free, as long as it's less than the annual limit?

[Loretta P · Accepted solution]

Hello MsLeslie,

You didn't mention what type of entity your business is, for example sole proprietor (filing a Schedule C with your Form 1040), S-Corp (filing Form 1120-S), partnership (filing Form 1065).

If you already have the solo-401K set up, you are only able to contribute to it from your self employment income, you are not able to use any of your w-2 wages to contribute to the solo-401K.

You will still be limited to the elective deferral limit for 2024 of $23,000 for individuals under the age of 50 and those who are 50 or older can add an extra $7,500 as a catch-up contribution, making the contribution limit $30,500. 

If the elective deferral limit is reached by contributions from the w-2 wages, then only the employer portion of the contribution could be made into the solo-401K.

Retirement plan FAQs regarding contributions - S corporation 

One-participant 401(k) plans