403b Contribution Aggregation Question

QUESTION:

I have a 403(b) plan at my day moonlighting job, to which I am planning to max out on employee contribution this year $19.5k. I was reading the IRS rules regarding maximum contribution limits, and there’s one part that’s confusing me. (I have attached the IRS rules sheet.). If you look at “chapter 3; Limit on annual Deductions”, it says that, since I have a 403(b) at work, I have to combine all the contributions that I make to ALL my plans (including my solo 401k for my SE job), to determine my MAC. Is that true? if so, will is still be able to the mega backdoor roth conversion in my solo 401k and max out at $58k in that account? Or will it be less than that?  viz, 58 -19.5= 38.5 k? Here is that paragraph: 

ANSWER:

The rule discussed in the above Publication 571 deals with the control group regulations and comes into play if you are an owner in both the business that sponsors the 403b as well as an owner in the self-employed business that sponsors the solo 401k plan.  

In your particular case, the above rule does not apply to you because you are not an owner in both businesses, just the business that sponsors the solo 401k plan. As such, regardless if you have already contributed the full $19,500 for 2021 to your 403b and you also want to maximize the voluntary after-tax contributions to the solo 401k plan you may do so as long as you have the applicable net self-employment income from your self-employed business to support the contribution because voluntary after-tax contributions fall under the overall 457 limit. Visit here to learn more. 

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About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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