How much self-employment income do I need to maximize Solo 401k contributions (S-corp/C-corp/W-2/LLC taxed as Scorp)?

August 30, 2023 | By Mark Nolan

This post discusses how much self-employment income a self-employed individual needs to maximize solo 401k contributions for an S-corp., C-corp., or an LLC taxed as an S-corp, W-2 wages from the self-employed business.

Video Slides:

https://www.mysolo401k.net/wp-content/uploads/2023/09/How-Much-Income-Do-I-need-to-Make-S-Corporation-C-corporation-LLC-taxed-as-S-corp-C-corp-with-W-2-Wages.pdf

Scenario 1: Maximize Pre-Tax Employee Contributions Only while keeping W-2 Wages Low to maximize S-corp benefit (i.e. contribute all my w-2 wages to pre-tax solo 401k)
- Under 50 : $22,500 (employee contribution)
- 50 or older: $30,000 (22,500 employee and 7,500 Catch up)
- Assume No day job contributions
- 2023
Scenario 2: Maximize Pre-Tax by contributing both employee & employer contributions while keeping W-2 Wages Low to maximize S-corp benefit (i.e. contribute all my w-2 wages to pre-tax solo 401k)
- Under 50 : $30,000 (22500 employee and 7500 employer)
- 50 or older: $40,000 (30000 employees and 10,000 employer)
- Assume No day job contributions
- 2023
Scenario 3: Maximize Pre-Tax Only
- Under 50: $174,000 w-2 wages would allow $66,000 to pre-tax (22,500 employee and 43500 employer)
- 50 or older: $174,000 w-2 wages would allow $73,500 to pre-tax (30,000 employee and 43500 employer)
- Assume No day job contributions
- 2023
Scenario 4: Maximize Roth Only
- Under 50: $66,000 w-2 wages would allow $66,000 (22,500 employee and 43500 after-tax)
- 50 or older: $73,500 w-2 wages would allow $73,500 (30,000 employee and 43500 after-tax)
- Assume No day job contributions
- 2023