QUESTION:
Are after tax contributions limited to the amount of income earned by the business, or can we use income from other sources to fund after tax contributions?
ANSWER:
Good question. Just like pretax contributions can only be made based on net self-employment income, the same rules apply to after tax contributions–that is, after-tax contributions are also based on net self-employment income from the business that sponsors the solo 401k plan. In other words, the solo 401k rules do not allow for contributions based on your personal funds or wages from a full-time employer, for example.
