I’m a business attorney in Texas and I have utilized your services in the past to set-up Self Directed 401(k)’s for my clients. I have a quick question regarding a contribution scenario:
QUESTION 1:
Can a husband utilize profit sharing from side business to increase his contributions even though he has a day time job?
ANSWER: Yes, provided the rules outlined in the following link are satisfied. See following link for more on this. https://www.mysolo401k.net/multiple-retirement-plan-solo-401k-contribution-rules/
QUESTION 2:
Finally, how would these 401k contributions effect the deduct-ability of an IRA LLC contribution if we were to set those up through your firm as well?
ANSWER: See below charts for this.
I’m making a late year push to get several clients to set up self directed 401k accounts and I plan to utilize you services in a similar manner as last year. It was very efficient.
Table 1-2. Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work
| If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. |
| IF your filing status is … | AND your modified adjusted gross income (modified AGI) is … | THEN you can take … |
| single or head of household | $59,000 or less | a full deduction. |
| more than $59,000 but less than $69,000 | a partial deduction. | |
| $69,000 or more | no deduction. | |
| married filing jointly or qualifying widow(er) | $95,000 or less | a full deduction. |
| more than $95,000 but less than $115,000 | a partial deduction. | |
| $115,000 or more | no deduction. | |
| married filing separately2 | less than $10,000 | a partial deduction. |
| $10,000 or more | no deduction. |
| 1 Modified AGI (adjusted gross income). See Modified adjusted gross income (AGI) , later. 2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). |
Table 1-3. Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work
| If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. |
| IF your filing status is … | AND your modified adjusted gross income (modified AGI) is … | THEN you can take … |
| single, head of household, or qualifying widow(er) | any amount | a full deduction. |
| married filing jointly or separately with a spouse who is not covered by a plan at work | any amount | a full deduction. |
| married filing jointly with a spouse who is covered by a plan at work | $178,000 or less | a full deduction. |
| more than $178,000 but less than $188,000 | a partial deduction. | |
| $188,000 or more | no deduction. | |
| married filing separately with a spouse who is covered by a plan at work2 | less than $10,000 | a partial deduction. |
| $10,000 or more | no deduction. |
| 1 Modified AGI (adjusted gross income). See Modified adjusted gross income (AGI) , later. 2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. |
