Question

solo 401k contribution and deduction

Forum|Forum|4 years ago
March 7, 2022
1 reply
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I have already made my elective deferral of $26,000 (age 65). I have Schedule C income of $94,762 - my self employment tax is $13,390 (so 50% is $6,695).

To calculate my additional contribution (employer contribution) the following:

1- $94,762 - $6,695 = $88, 067

2- $88,067 * 25% = $22,017 - this is the additional amount I can contribute (or any sum up to that amount) - correct?

3- Where do I record the additional amount in the 401k section so I get say the full $26,000 +$22,017= $48,017? (or an amount up to that value - say I only want to add an additional $20k vs the $22k)

Mick

M

MayaD

Here’s how to enter your Solo 401(k) contributions in TurboTax:

Open or continue your return in TurboTax, if you haven’t already
Locate the search bar in the top right of your screen, and search for self-employed retirement plans (be sure to include the hyphen). Select the jump-to link at the top of the search results
On the Self-Employed Retirement Plans screen, answer Yes to the question Did you make a 2021 self-employed retirement plan contribution?
On the next screen, answer Yes to Did you contribute to an Individual or Roth 401(k) plan?
On the next screen, to enter your employee contributions, enter your Elective Deferrals and any Catch-Up Contributions you made in 2021
To enter your company contributions, enter your Employer Matching (Profit Sharing) contributions for 2021
If you haven’t made all your contributions for the tax year and would like TurboTax to calculate your maximum contributions for the year, check the box next to Maximize Contribution to Individual 401(k) and Continue
On the Adjusting Self-Employment Income screen, enter any changes you'd like to make to your self-employment income as it’s been calculated by TurboTax (this is rare). Enter a positive number if you’re adding an amount, and a negative number if you’re subtracting. Select Continue
If you checked the box next to Maximize Contribution to Individual 401(k), you’ll see Your Self-Employed Retirement Deduction. This screen shows the maximum amount you can contribute to your Solo 401(k) for the tax year

How do I enter a Solo 401(k) in TurboTax?

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J

JaegermlAuthor

You didn't answer the first part of my question re calculating employer portion of solo 401k contribution - please reread and respond.

Mick

D

DianeW777

Calculating the amount of your allowable deduction is done like your example providing your plan has a 25% rate (see the link below). Total plan contributions, excluding catch-up contributions ($6,500) for those age 50 and over, can't exceed $58,000 for 2021 ($61,000 for 2022).

The deadline for employee contributions to a Solo 401(k) is December 31 of the tax year, which means you can no longer make employee contributions for 2021. The deadline for company contributions is generally the tax filing deadline, which is April 17, 2022.