BACGROUND & QUESTION:
So in March 2020 I had to shut down my business because the building I was operating in closed down due to COVID-19 infections. I then applied for and obtained the Pandemic Unemployment Assistance (PUA), which will total about $20K+ from March to December 2020.
This new unemployment assistance (PUA) is a category specifically made for Business Owners, Sole Proprietors, Contractors and Freelancers (newly signed off by Trump as part of the Federal CARES provision), who are traditionally not eligible for any unemployment assistance from the state (see link: https://edd.ca.gov/about_edd/coronavirus-2019/pandemic-unemployment-assistance.htm). This is also NOT the same thing as PPP, or paycheck protection program, with zero relation to it.
Come March 2021, I have to pay income tax on this money. I was wondering if I can contribute a portion of this fund into my solo 401k plan to minimize any income tax owed.
I know if I was conventionally employed by an conventional employer, and then laid off — I would NOT be able to contribute any traditional unemployment funds into 401k plans — but this is entirely new and since it was designed for business owners and sole proprietors, I thought I need to ask this question.