Hi! This year I will receive FTE income on a w-2 as well as freelancer income on 1099. Will this affect any contributions I can make to my Solo 401k? Would I be able to contribute all 1099 income straight to my solo 401k tax free, as long as it's less than the annual limit?
Hello MsLeslie,
You didn't mention what type of entity your business is, for example sole proprietor (filing a Schedule C with your Form 1040), S-Corp (filing Form 1120-S), partnership (filing Form 1065).
If you already have the solo-401K set up, you are only able to contribute to it from your self employment income, you are not able to use any of your w-2 wages to contribute to the solo-401K.
You will still be limited to the elective deferral limit for 2024 of $23,000 for individuals under the age of 50 and those who are 50 or older can add an extra $7,500 as a catch-up contribution, making the contribution limit $30,500.
If the elective deferral limit is reached by contributions from the w-2 wages, then only the employer portion of the contribution could be made into the solo-401K.
Retirement plan FAQs regarding contributions - S corporation
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