Contribution limits for Solo Roth 401(k)

Submitted by Edgar Dworsky on Wed, 2016-03-09 22:43

While conventional IRAs and 401(k) plans have limits related to your earned income, is there a similar limit for solo Roth 401(k)’s?

Or is it merely the $18,000 maximum contribution plus the $6000 make up contribution for those over 50.

Sadly, I don’t make $24,000 a year in earned income, but automatically put in the maximum.

I am not depositing any deferred income, only after tax money.

I should point out that TurboTax does not flag the $18,000 + $6,000 amounts as over the limit for a solo Roth 401(k), but does flag it for a conventional 401(k).

Thanks,
Edgar



Submitted by Alan - IRA critic on Wed, 2016-03-09 23:10

Do you get a W-2 as an S Corp shareholder?  Or file Sch C?



Submitted by Edgar Dworsky on Wed, 2016-03-09 23:54

Schedule  c… Sole proprietorship. 



Submitted by Alan - IRA critic on Thu, 2016-03-10 00:41

I don’t know why it would be different. The elective deferral limit is the lower of the 402g dollar limit or the compensation generally defined as follows::

Self-Employed PersonsFor a self-employed person (which includes sole-proprietors and partners in a partnership), compensation is generally earned income, determined at the end of the year, reduced by employer contributions to retirement plans made on behalf of the self-employed individual (other than 401(k) deferrals).Employee contributions can only be made with respect to earned income derived from the business that sponsors the plan. Even though compensation is not determined until the end of the year, regulations provide that a 401(k) plan is permitted to accept deferrals made during the year by partners from guaranteed payments or other cash advances made during the year, so long as these payments do not exceed a reasonable estimate of the partner’s earned income during the year.



Submitted by Edgar Dworsky on Thu, 2016-03-10 11:15

Thanks. Does anyone else have any thoughts?



Add new comment

Log in or register to post comments