2023 Employee Roth Solo 401(k) Contribution

Submitted by Brandon Blanchard on Tue, 2023-12-12 23:52

I have a client that owns an S corp. She is the only employee. 2023 will be a very low income year for her. her w2 wages through the S corp will only be $12,000. Can she make a 2023 employee contribution into her Roth Solo 401(k) for $12,000? Or should it be slightly smaller due to FICA taxes? If so, how much would be the max?



Submitted by William Tuttle on Wed, 2023-12-13 22:25

  • W-2 employee deferrals must be deducted from compensation* not already received**, with a pay date by 12/31 and deposited within bussiness 15 days of the last day of the month.
  • For 2023 employee deferrals that would be 01/23/2024. Also, they have to be reported on the employee’s Form W-2 required to be filed with the IRS and distributed to the employee by 01/31/24.
  • Employee deferrals can only be deducted from net compensation after mandatory deductions. Which include FICA, if applicable (federal, state and local) income tax withholding, etc…

 

  • *Compensation can include any health insurance premiums and/or HSA contributions made or reimbursed by the S-Corp, included in the S-Corp’s Form 1120-S Line 7 Officer’s Compensation and the employee’s Form W-2 Box 1.
  • **If any of the $12,000 has already be paid to the employee, it can not be used as the basis for any 2023 employ deferrals Only salary reductions from remaining payroll with a pay date by 12/31/23 can be used.


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