Solo 401(k) Contribution Calculator

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

Input

Output

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Summary

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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11 Comments

  1. Crystal

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

    Reply
    • Go Curry Cracker

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

      Reply
  2. Dan

    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!

    Reply
    • Go Curry Cracker

      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 = $18,587

      If 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.

      Reply
  3. Sean

    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!

    Reply
    • Go Curry Cracker

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

      Reply
  4. andy

    Hi Jeremy,

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

    Reply
    • Go Curry Cracker

      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.

      Reply
      • Andy Chen

        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!

        Reply
        • Go Curry Cracker

          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.

          Reply
          • Andy Chen

            I see. Thanks!

            Reply

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