Solo 401 k LLC Contributions | LLC Taxed as a Partnership | K1 Line 15a

BACKGROUND: Hi, I have a LLC (Calif corp) in which my wife and I are members. We have no employees. At the end of the year, the company files a form 1065. We then get K-1s which we then include in our joint 1040.

QUESTION: We have a solo 401 k account. Assuming the LLC has a net income of $ 125,000 for the year 2017 (before any contribution deduction) Can you advise how much contribution we can both make (both employee and employer share) for 2017 ? We are both under 50 years of age.


Teresa O. in California

ANSWER: Contributions to a solo 401k are based on net earnings from self-employment. If the self-employed business type is a LLC that has elected to be taxed as a partnership, the starting point for determining net earnings from self-employment is  line 14 Code A of Schedule K-1. You will then plug the amount listed on line 14 in our solo 401k contribution calculator which will calculate both the Solo 401k employee (salary deferral) and employer (profit sharing) contributions.  For tax year 2017 the maximum contribution that each solo 401k participant can make is $54,000 plus $6,00 if he or she is age 50 or older. Note that the solo 401k contribution limits apply separately to each solo 401k participant and may change each year based on yearly cost‑of‑living adjustments.

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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