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
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?
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.
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.
- 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.)
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.