Solo 401k Contribution Limits and Types

With a Solo 401(k), depending on your salary and age, you could contribute $53,000 per year or $59,000 for those 50 or older in 2016.

For 2017, the contribution limit increased to $54,000 or $60,000 if age 50 or over.

Contributions to a Solo 401(k) consist of two types

Type 1

Elective Deferral (401k) also known as Employee Contributions. The maximum elective deferral is $18,000 in 2016 and 2017, or $24,000 in 2016 and 2017 if age 50 or over.

Type 2

Profit sharing also known as Employer Contribution. This amount cannot exceed $53,000 for 2016. For 2017, this amount cannot exceed $54,000.

If your business type is a Corporation, the maximum profit sharing contribution is 25% of gross income.

If your business type is a Sole Proprietor/Partnership, the maximum profit sharing contribution is 20% of net income

*IMPORTANT

If you decide to take the full $18,000 for the elective deferral (Type 1), you are limited to making $35,000 in profit-sharing contributions (Type 2) so that your contributions do not exceed $53,000 for 2016.

For 2017, If you decide to take the full $18,000 for the elective deferral (Type 1), you are limited to making $36,000 in profit-sharing contributions (Type 2) so that your contributions do not exceed $54,000

Rollover Contributions and Direct Transfer 

You may “roll over” into your Solo 401(k) amounts you have in another 401(k), a governmental 457(b) plan or a 403(b) plan. You may also “roll over” amounts you have in an IRA (other than a Roth IRA) into your Solo 401(k).

There are no limits on the amount that you can Rollover or Transfer.

Contribute to Multiple 401(k) Plans

To learn how to shelter more of your earnings, click here 

Calculate your maximum contribution

Use our free Solo 401 Contribution Calculator. All you need to do is enter your name, age and income — you’ll get a contribution comparison between a Solo 401(k), SIMPLE, and SEP IRA.

Who may establish a Solo 401k?

Generally, any business may adopt a Solo 401(k). The business need not assume any particular legal form. Thus, a self-employed business owner, a partnership, a limited liability company (LLC), or any type of corporation (including a Sub-chapter S corporation) may adopt a Solo 401(k).

By when does a Solo 401(k) have to be established?

An employer must establish the plan by the end of the tax year for which the tax deduction is desired. For example, an employer operating the plan on a calendar-year basis must complete the plan documentation no later than December 31.

 

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