Company 401k and an Individual 401k in the Same Year
I have a client who worked for 9 months for a company in 2008 before quitting, contributing $7,000 to his 401k during 2008.
He then started his own consulting business, opening as a sole proprietor, and earned $26,259 during the final 3 months of 2008. He also opened an Indivdual 401k.
He is over age 50.
My calculation says that for his sole proprietorship he could contribute $25,681 maximum to his individual 401k. Does he have to reduce that by the $7,000 he put in at his old company?
Thanks
Permalink Submitted by mk foss on Mon, 2009-03-02 00:50
There is a plan limit of $46,000 per individual. I’m not sure how you calculated the contribution. With a 401k he could defer 15,500 into a 401k plan – the 7,000 would reduce that amount so only 8500 would be available (plus 5000 for being over 50). The employer contribution would be 20% of the net income reduced by 1/2 of the SE tax. I’m only seeing a contribution of about 20k.