Solo 401k FAQ – Does my business need to make a profit before I can make Solo 401k contributions?

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Self-employed 401k Question: My business is taxed as an S-corporation and I receive w-2 wages of $50,000 per year.  Does my business need to show a profit in order for me to be able to make profit-sharing contributions?

Great question.

The ability to make Solo 401k contributions is one of the top reasons that our clients set up accounts with us.

We field questions every day from our clients in terms of how much they can contribute, the deadline, etc.

With regards to this question, please note that the Solo 401k owner’s ability to make employee contributions as well as employer (profit-sharing) contributions is based on the W-2 wages that such person receives from the business.  

For example, in this case the Solo 401k owner could make an employer (profit-sharing) contribution equal to 25% of your w-2 wages (i.e. $12,500).

For more information see: https://www.mysolo401k.net/solo-401k/solo-401k-contribution-limits-and-types/

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About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>

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