As a self-employed individual, we have 2 roles - the business owner and the worker, the employer and the employee. The solo 401(k) can receive retirement contributions from both. Determining the size of those contributions can be a challenging process, but this calculator can help.

## Solo 401(k) Contribution Calculator

## Usage

### Inputs:

**Year**: Your tax year.

**Business Profit**: Total self-employment income from all sources, minus business expenses.

**Age**: Are you 50-years-old or older? If so, you can make an additional catchup contribution.

**Day Job?**: Do you also have W2 employment? This check box enables additional day job related inputs.

**Day Job Income**: How much did you earn at your day job? (if applicable)

**Day Job 401k**: Did you contribute to your work 401(k) plan? If so, how much?

**Day Job Catchup**: Did you make a catchup contribution do your work 401(k) plan? How much?

### Outputs:

**Net earnings from self-employment**: Calculated as Schedule C income minus the deduction for SE taxes. To see how this works, check out our Self-Employment Tax Calculator.

**Elective deferral for Employee**: The maximum amount you can contribute to your solo 401(k) as an employee.

**Profit sharing from Employer**: The maximum amount you can contribute as an employer.

**Catchup max**: If you are able to make a catchup contribution, this is the max.

**After-tax Non-Roth max**: The maximum after-tax contribution. This is used for planning the mega backdoor Roth.

## Background

As a sole-proprietor (or owner of an LLC taxed as such) we are able to contribute to a solo 401k retirement account as both the employer and employee.

Limits apply:

- Total contributions cannot exceed net earnings or the 415c limit ($56k in 2019).
- Employee elective deferral contributions can be made to only one 401k account.
- Employer contributions cannot exceed the lesser of 20% of net earnings or 1/2 the difference between net earnings and the employee contribution.
- After-tax contributions can't exceed total compensation (defined as earnings after the employer contribution.)

### Considerations

Contributions to a solo-401k can be made up until the filing date with deferrals (or as defined by plan documents), but the 401k must exist by Dec 31st of the tax year.

Employee contributions can be Traditional (pre-tax) or Roth (post-tax), but Employer contributions are always pre-tax.

Calculations are based on a 25% employer contribution / 20% of net earnings. In some instances this may not result in the largest after-tax non-Roth contribution.

**Disclaimer**: Always consult with a professional before taking action. This calculator may not produce accurate results in all scenarios, including those most important to you.

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Can the employer and employee portion be contributed in the next filing year for the previous year if the account exists by dec 31?

Yes, you can contribute up until your filing deadline (with extensions) or whatever your solo401k plan docs specify

Thanks for creating this calculator! 2019 was the first year that I had my Solo 401k. I am self-employed, and have an S-Corp. I am trying to wrap my head around how much the limit is on the Employer contribution. I thought it was 25% of what I paid myself in W2 wages. But I also see references to 20%. (my numbers: 60K W2 wages, 19k Employee contribution, 15K Employer match) . Any clarification would be great..

Thanks!

Short answer:

For S-corp, the contribution limit is just 25% of your S-corp wage (no need for a calc, the math is easy.)

Long answer:

For sole proprietor / LLC taxed as sole-proprietor, the math is more complicated… thus, this calculator. Technically, the contribution limit is still 25%, but it is 25% of a different number… which is also equal to 20% of net earnings from self-employment (which is itself an adjustment from business profit due to a deduction for 1/2 of self-employment taxes.)

To determine the contribution limit for sole-proprietor, the Table and Worksheets for the Self-Employed in Chapter 5 of IRS Publication 560 goes through the math/process.

Example calc:

Business profit: $100k

Net earnings: $92,935 (minus 1/2 SE taxes = $7,065.)

20%of net earnings = $18,587If your business contributes $18,587 on your personal behalf, then your effective take home pay is:

$92,935 – $18,587 = $74,438

And

25%of $74,438 is equal to… $18,587.Can you point me to where it says that “Employer contributions cannot exceed the lesser of 20% of net earnings or 1/2 the difference between net earnings and the employee contribution”? I’ve only seen the “1/2 the difference” part in blogs but not on the irs website where I’ve only seen the 20% of net earnings part. Thanks!

Walk through the Deduction Worksheet for the Self-employed in Chapter 5 of IRS Pub 560.

Hi Jeremy,

I was just wondering which brokerage did you set up your solo401k?

I opened mine with Etrade. At the time (5 years ago?) there were 2 main options if you wanted a Roth 401k, Etrade and Vanguard. Vanguard, as far as I recall, had higher fees (you couldn’t buy Admiral funds, only the higher expense ratio options.)

I don’t know if there is a better option now.

Thanks for getting back to me! I have another question regarding contributions to a solo401k. Can you contribute to the employee side anytime in the year up to the contribution limit of 19500 for 2020 or are you only able to make contributions at the end of the year when you know exactly what your business profits are. Of course I will not put in more than I earn cause I anticipate making more than 19,500 before expenses are factored in.

I was thinking of making contributions as I make income but wasn’t sure if that was correct. I’m assuming for the employer side you would have to wait till the end of the year because in order to calculate the employer side you need to see your total business profit. Couldn’t find anything online specifically stating this and just wanted to ask from your experience have you done this or have just waited till the end of the year to contribute the total amount for both the employee and employer side.

Thanks again for the help!

I always do it at the end of the year, but there are no requirements (that I’m aware of) that you can’t front-load it. But be wary – over contributing can come with penalties and hassle.

I see. Thanks!

Just came across this when I was trying to double check everything. Always nice to see GCC on page 1. Didn’t know you had made this!

Page 1 you say? Nice!

Your website & info is SO helpful! The IRS should hire you as a consultant – I read for hours without finding clear answers, but then find yours and what a relief! Thank you! Now my Q – I see you say that you typically just wait until filing time to calculate & contribute…I don’t really want to pile up the cash all year waiting until tax time to contribute. I’d like to contribute as the $ comes in. I get the employee side, but do you have any tips on how to estimate the employer side as we move thru the year – id just rather get the $ in the market sooner than later. also happy to lowball it by a % just to be safe, just unsure how to estimate as the year is in session. Thanks for any help!

Take your profit calculations used for paying estimated taxes and use that to inform employer contribution calculations?

I was wondering if you can open a Solo 401k if just have DBA or you need business Tax ID?

Yes. But you should get an EIN. It’s free and easy.

https://www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein

I’m having a hard time with the “1/2 the different between net earnings and employee contribution. I have earnings of $665., $618 is maximum deferral. The math part of the above statement is confusing me.

You have no employer contribution. This is something else – just the calculation of net earnings.

The self-employment tax calculator explains the math:

Income subject to SE taxes (92.35%) $614

SE Taxes $93 (15.3% of $614)

1/2 SE Taxes $46

Net Earnings $618

With $618 of net earnings, just contribute to an IRA – no need for the hassle of a solo401k

Hi Jeremy, Thanks for this very helpful calculator!

My full-time W-2 “Day Job” is a government job for which I do not pay any Social Security taxes. This due to an IRS rule which applies to public workers who participate in a government pension plan comparable to Social Security.

I do pay the 1.45% Health Insurance Tax (HIT) established by Affordable Care Act, as well as the Additional Medicare Tax assessed on people who earn more than $200,000 annually on an individual basis, or $250,000 for an annual family income (an extra 0.9 percent tax on top of the standard tax payment for Medicare). I do not have any 401k plan with my W-2 day job.

My question: should I include my Day Job Income in your Solo 401k Contribution Calculator? Since Social Security taxes are not deducted from my Day Job income, I’m wondering if your Solo 401k Contribution Calculator will yield an erroneously higher contribution amount than is actually allowed by the IRS if I include my Day Job income in the calculation, rather than just inputting my self-employment side gig income into the calculator.

Also, does the Additional Medicare Tax deducted from my Day Job income (the extra 0.9 percent on top of the standard 1.45% Health Insurance Tax) affect my Solo 401k Contribution Calculator results?

Thank you!

You should set day job income = 0.

Medicare taxes don’t impact the calculations since there is no ceiling.

Thank you for the calculator, but I have an added wrinkle to the calculation. I have both a solo 401k (pretax) and a Roth IRA (after tax). I contribute the max allowed to the Roth IRA each year (which is currently $6000 as I’m under 50) and I want to calculate the maximum I can contribute to my solo 401k. How do I go about doing that calculation?

Lets say my net income after expenses is $40,000. Tell me if I’m calculating this right.

$40,000 – $2,826 (1/2 SE tax) = $37,174 – $6000 (Roth IRA contribution) = $31,174 x 0.2 = $6,234.80 (max employer contribution) + $19,500 (max employee contribution) = $25,734.80 max solo 401k contribution.

I can’t seem to be able to find a solo 401k calculator that takes into account IRA contributions. I know I’m not the only one who has a solo 401k and a Roth IRA. I know IRA contributions impact the contribution amount to a solo 401k since both are based on total “work” income (aka not income from sources such as interest, dividends, stocks, etc.). I’m just not sure if I’m calculating it correctly. If not I would appreciate any help you can provide in calculating it correctly as like I said I can’t find a calculator anywhere to help me.

Thank you!

Contributing to a Roth IRA doesn’t change anything. But contributing to a solo401k may change how much you can contribute to a Roth IRA.

See this post: Double Your Roth Contributions (Without Working or Earning More)

You can safely contribute what this calculator spits out to your solo401k. Then, subtract that amount from net earnings. This is the most you can contribute to an individual IRA of any type.

Thank you for the quick reply. Great article. I see what you mean by funny IRS math, but as someone who isn’t fluent in it I find it to be confusing math. No wonder most people either have a program do their taxes for them or a tax preparer. Every time I decide to actually figure out the numbers on my taxes I come away with a headache from trying to follow the IRS’s insane rules and calculations.

So if I’m figuring this correctly with our prior hypothetical example of $40,000 your calculator gives me $37,174 of net earnings from self-employment. According to it this would allow a $19,500 (employee) + $7434 (employer) = $26,934 max solo 401K contribution. If I subtract this from the net earnings of $37,174 that gives me $10,240.

So if I have this figured correctly that would mean this person could contribute $26,934 to their solo 401K and $6000 to their Roth IRA since $6000 is less than the $10,240 max.

If I made a wrong turn on my math please let me know. I really appreciate your help.

Thank you again!

You have it figured correctly

Thank you so much!

Glad to help.

If this is your total ordinary / earned income, you probably want to contribute more to Roth. Your standard deduction (single) aka the 0% tax bracket is at least $12k

How do you consider the Gross Wages paid from the same entity the Solo 401k was created for? Example $50,000 in Wages and Net Income of $60,000

If you are a sole-proprietor they are the same. If you are an S-corp just take 25% of gross wages.

See this comment.

(sorry if this is a duplicate, last didn’t seem to post?)

For a net profit of 285,998, the calculator returned:

$3337 as an employee.

$54662 as an employer.

$6500 as a 50+ catchup contribution.

Is there a reason NOT to contribute $26K as employee, vice putting it all as employer? That’s what I was going to do, but now, I’m wondering if minimizing the employee, it allows for greater employer, or is it all the same at the end?

What does the $6500 go under – employee or employer?

I see both comments – sorry, I am mostly offline for the holidays.

With this level of income you should look at an S-corp so you are only paying SE taxes on reasonable compensation of ~$40k or so. If you are an S-corp, then this calc doesn’t apply.

The catchup always goes under employee – it is tied to the individual.

Looks like I have a bug here – your income always max contributions across the board – the employee contribution should be the max $19.5k with employer limited to $58k-$19.5k and then the catchup contribution.

I think I fixed the bug – I had a formula that updated a variable called employeE_max when it should update employeR_max, and it only executed when you earned enough to contribute the max (e.g. $58k)

A question about S-Corp – my short amount of reading, is it too late to change to an S-Corp for tax year 2021? We’re Sole Proprietorship currently, been in business 3 years. Our tax year is JAN 1 – DEC 31, and we have not filed taxes for 2021.

Thanks so much!

Yes, it is too late. You could do S-corp for 2022 though.

Tax savings wise, you could pay SE taxes on maybe $40k (reasonable comp) instead of the max of $142,800 (2021.) 6.2% of $100k is a lot. Worth talking to an accountant.

Hello, quick question if I set up a solo 401k for my Llc and wanted to make sure I had the correct contribution. If the business had a profit before the 401k of say $210k and I put in the max of $58k. Would you use $210k in the calculator above or $162k the net minus the deferral?

$210k

The IRS says to report solo 401k contributions on line 16 of schedule 1. Does this include Roth contributions?

No. No deduction for Roth

I’m confused… The maximum contribution limit for 2021 is 64,500 with the catch up contribution included. My adjusted net business income for 2021 was 63,823. In my plan the Employer Profit Sharing Contribution is “Optional”. So, starting with 68,675 my adjusted net comes to 63,823 skipping the Profit Sharing option minus the 19,500 = 44,323 minus the catch up 6,500 = 37,823 that is the amount I come up with for my Voluntary After tax Contribution. My plan is a Solo Roth 401k. I’m concerned that I misunderstood something. Where did I go wrong?

Please Help!

Thank you, Patrick

For most (all?) non-custom plans, the employer contribution is fixed at 25% and works as per this calc.

If you have a custom plan with employer contribution as 0%, then you can squeeze a bit more in for after-tax nondeductible contributions (presumably for mega backdoor Roth.) I seem to recall the Finance Buff has a spreadsheet that has this as a configurable option and the numbers probably work out to what you have calculated. I would include a link but gotta run, please Google.

In your calculation, in the case of income of $35000 for 50 years old, why catch-up contribution is not $6500, but equals to employer contribution of $6013? Thanks

After you have made $20,500 of employee contributions and $6,013 of employer contributions, you only have $6,013 of eligible income to contribute.

Thank you very much for putting this together.

It seems like the calculator is using a75% of Net Income – Employer Contribution to calculate after-tax non roth contribution amount.

Is that what the law allows or an assumption of 25% income tax rate in the code to make the calculation easier?

There are no taxes calculated or assumed.

25% is the maximum allowed for employer contributions and is the common implementation. If you have a custom plan you could choose to make it at low as 0%, which would increase the potential size of after-tax non-Roth contributions.

Thank you. I appreciate the reply.

My comment is regarding the math used to calculate after-tax non roth contribution value. It seems to be flat 0.75*compensation, where compensation is net income – employer contribution. I’d expected 100% of compensation to be eligible for after-tax non roth.

For example, if I had $10,000 in business profit, and already maxed out pre-tax 401k through day job, here is the math you calculator outputs:

$1973 employer contribution

$5919 after-tax non-roth contribution

The math for $5919 seems to be ($9866 – $1973) * 0.75.

Shouldn’t it be $7893 which is just 9866 – 1973 ?

I apologize if I missed something. Just trying to make sense of the math for after-tax non roth contributions.

The math is wonky. Due to IRS math you aren’t able to contribute 100% / some is left on the table, as the calculations use “Compensation” vs “Net earnings”

Math:

Profit = $10k

Net earnings = $9866 (deduction of medicare taxes)

Employer contribution = $1973 (20% of $9866)

Compensation = “Take home pay” = $9866 – $1973 = $7866

After-tax non-Roth amount = Compensation – employer contribution = $5919

The only way to get to be able to contribute all of the net business profit ($9866) would be to have a profit sharing / employer contribution amount of 0% in your solo-401k formation docs. You could do this by administering your own solo-401k, but afaik all of the main administrators have this value hard-coded at 25% (max allowed by law.) That is what this calculator assumes.

With a $0 / $0 employer contribution, that last calculation works out to be equal to net earnings.

To understand why employer contribution = 20% of net earnings (vs 25%), see this comment.