2020 and 2021 Compensation Limits for Making Annual Solo 401k Contributions

The IRS rules place salary limits for making annual solo 401k contributions. These salary/compensation limits are generally adjusted annually for cost-of-living increases in accordance with Code section 401(a)(17)(B). 

Solo 401k Contribution Types

 

  1. Employer profit sharing contributions: are always made on a pretax basis and are tax deductible on the business tax return.
  2. Pretax employee salary deferral contributions: are tax deductible on the individuals tax return (i.e., Form 1040).
  3. Roth designated employee contributions: are a type of employee contribution that, unlike pre-tax employee contributions, are currently includible in gross income but tax-free when distributed.
  4. Employee voluntary after-tax contributions: are not excluded from income and cannot deduct them on your tax return.
  5. Catch-up employee contributions: can only be made if the participant is age 50 or over at the end of the calendar year, and cannot be applied as a voluntary after-tax contribution.  

Following are the self-employment income salary limits for 2019, 2020 and 20201 for making self-directed solo 401k contributions. 

Self-Directed Solo 401(k)202120202019
Annual Compensation290,000285,000280,000
Elective/Employee Deferrals19,50019,50019,000
Catch-up Contributions6,5006,5006,000
Overall Limits58,00057,00056,000
IRAs202120202019
IRA Contribution Limit$6,000$6,000$6,000
IRA Catch-Up Contributions1,0001,0001,000
Traditional IRA AGI Deduction Phase-out Starting at202120202019
Joint Return105,000104,000103,000
Single or Head of Household66,00065,00064,000
SEP202120202019
SEP Minimum Compensation650600600
SEP Maximum Contribution58,00057,00056,000
SEP Maximum Compensation290,000285,000280,000
SIMPLE Plans202120202019
SIMPLE Maximum Contributions13,50013,50013,000
Catch-up Contributions3,0003,0003,000

 

  • We’re here to help.

    Call: 800-489-7571

    Monday-Saturday

    8:00 am - 4:00 pm PT

    Why us?

SOLO 401(K)

MENU