Contribute to a Solo 401k, Roth IRA, and Traditional IRA for 2021

Contributions to Traditional IRAs and Roth IRAs Are Aggregated

Contributions to IRAs and Roth IRAs are aggregated. This means that for 2021 you cannot contribute $6,000 to each type (i.e., traditional and Roth IRA); however, you can contribute some to each up to the $6,000 combined limit. If you are aged 50 or older in 2021, your IRA contribution increases to $7,000.

TRADITIONAL IRA CONTRIBUTIONS 

While the IRS rules allow for contributions to both Solo 401k plans and IRAs, if you are also participating in a solo 401k plan, you can still make the traditional IRA contributions but they may not be tax deductible. See the chart listed on the following IRS link for these  limits: https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work

2021 IRA Limits- Effect of Modified AGI on Deduction if You are Covered by a Retirement Plan at Work, or if You Contribute to a Solo 401k Plan

If you are covered by a retirement plan at work or contribute to a self-employed solo 401k plan, use this table to determine if your modified AGI affects the amount of your deduction. See IRAs for more information.

See IRAs for more information.

If Your Filing Status Is…And Your Modified AGI Is…Then You Can Take…
single or
head of household
$65,000 or lessa full deduction up to the amount of your contribution limit.
more than $65,000 but less than $75,000a partial deduction.
$75,000 or moreno deduction.
married filing jointly or qualifying widow(er)$104,000 or lessa full deduction up to the amount of your contribution limit.
more than $104,000 but less than $124,000a partial deduction.
$124,000 or more no deduction.
married filing separatelyless than $10,000 a partial deduction.
$10,000 or more no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

ROTH IRA CONTRIBUTIONS

While you can also contribute to a Roth IRA  and a solo 401k plan, not everybody qualifies for making a Roth IRA contribution if their modified AGI is over a certain limit. For these limits, please see the following chart. https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2020

Amount of Roth IRA Contributions That You Can Make for 2021

This table shows whether your contribution to a Roth IRA is affected by the amount of your modified AGI as computed for Roth IRA purpose.

If your filing status is…And your modified AGI is…Then you can contribute…
married filing jointly or qualifying widow(er)

 < $196,000

 up to the limit

> $196,000 but < $206,000

 a reduced amount

 >  $206,000

 zero
married filing separately and you lived with your spouse at any time during the year

 < $10,000

 a reduced amount

 > $10,000

 zero
singlehead of household, or married filing separately and you did not live with your spouse at any time during the year

 < $124,000

 up to the limit

 > $124,000 but < $139,000

 a reduced amount

 > $139,000

 zero

SOLO 401(K)

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