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I am self employed sole proprietor (no employees) and I am…

I am self employed...

I am self employed sole proprietor (no employees) and I am over 50 years old. I contribute to a Roth IRA for $6500 per year. How much can I additionally contribute to a solo-401K (including employer contributions)? -Chris

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Answered in 9 minutes by:
10/6/2017
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,123
Experience: Taxes, Immigration, Labor Relations
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Your contribution limit is based on your compensation.

The amount of compensation is calculated a little different for self-employed persons - but mainly is based on your net self-employment income.

The IRS provides a worksheet to calculate the the limit - but that might be more simpler to use any online calculator.

For instance

https://scs.fidelity.com/products/mobile/sepMobile.shtml

Assuming you have $40,000 in net business income - you will be able to contributed in 2017

- employee elective deferral - $18,000

- employer matching $7434

- catchUp for being above 50 - $6000

Total maximum contribution is $31434

Let me know what is your net self-employment income - and I will adjust estimations.

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Customer reply replied 9 months ago
My estimated net income for 2017 is 90,000.00. Does it matter that I contribute to a Roth as an individual? Does this 6500.00 get included in the annual tax year limits for contributions? Chris

That will only affect employer matching contribution portion because both employee elective deferral and catchup are at maximum already.

With $90,000 net business income - you will be able to contributed in 2017

- employee elective deferral - $18,000

- employer matching $16728

- catchUp for being above 50 - $6000

Total maximum contribution is $40428

.

Your contribution into Roth IRA will NOT affect your 401k contribution - however there is an overall limit for total contributions into ALL qualified retirement plans.

For 2017 that limit is $54,000.

So potentially your Roth IRA contribution MAY affect your 401k limitation - but in your specific situation is doesn't affect.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,123
Experience: Taxes, Immigration, Labor Relations
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