No and yes. There are several different factors to consider in order to calculate the ‘maximum amount allowed.’ For example, the main ones:

1) The individual’s employee elective deferral limit
2) The employer’s 25% deduction limit
3) The individual’s ‘contribution limit.’

Your question most likely refers mainly to #1 above. The limit is $15,500 and people who are at least 50 years of age by December 31 can contribute an additional $5,000, if the plan includes this option. This limit is on a per person basis. So for example if you’re under age 50 and have maxed out at $15,500 at your day job, you don’t get another $15,500 limit for your self employment activity. In other words, you can’t make any more employee elective deferrals. But if you couldn’t get to the $15,500 at the first employer for whatever reason—-for example you might be a highly compensated employee who was limited by the nondiscrimination test or perhaps the employer’s plan design just flat out limits you to a contribution that’s 6% of pay or maybe you’re 51 years old but the first plan doesn’t use the $5,000 optional catchup—–In any of these or other similar situations, your self employment plan can make up the difference for you.

Turning to limit #2 above, you put on your employer hat and take off your employee hat. You, the LLC, can contribute and deduct 25% of your LLC pay for the year. These dollars do not count against the employee elective deferral limit.

Limit #3 is the one that says each individual can have contributions made on his behalf that equal the lesser of $46,000 or 100% of pay. If the plan uses the age 50 $5,000 elective deferral catchup it’s possible for a person to get $51,000 in all. For this calculation you add up the dollars contributed under the two previously discussed limits. For example, let’s say your salary at the first job is $12,000. Your generous employer contributes 25% of pay on your behalf, which is $3,000. This means your employee elective deferrals are limited to $9,000. Even though your employee deferrals are within the $15,500 limit, you’ve been stopped by the 100% of pay limit, which in this example is $12,000. If by chance your employer uses the age 50 catchup and you’re eligible for it, you could then defer more than $9,000 up to the amount of your net paycheck. In this example you don’t make enough to put in the full $5,000 catchup amount. You’re not allowed to write a personal check to make up the difference.

Limit #3 is on a per employer basis. Assuming the two businesses are not part of a controlled group or an affiliated service group, it’s possible that a person could get $46,000 from each of the two businesses. Age 50 catchup is limited to $5,000 in total. In other words, it’s not possible to get $51,000 from each employer.

Finally, if by chance your status at your LLC is that of a W-2 employee, any employee elective deferrals must be taken out of your paycheck(s) by the end of your individual tax year, which is December 31 for just about everyone. If you’re not a W-2 employee, both employee and employer contributions can be made after the end of the year and still be deductible for 2008. You do need to sign the LLC’s 401(k) plan document by December 31, in order for the plan to be effective for the 2008 calendar year. If you’re maxed out on employee elective deferrals at the first job, you might consider adopting a SEP Ira instead of a 401(k). It too allows a 25% employer limit. It can be both signed and funded as late as the due date of the LLC’s tax return, including extensions.

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Can a single member LLC, with no employee make 401 contribution for it’s only member based on his k-1 distribution, and can the LLC take a deduction for matching amount? 

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