Skip to main content
March 7, 2025
Solved

I opened and contributed to solo 401k in Dec 2024. I just realized that contribution should be from Net Earnings. My business was at a loss. Is this Excess Contribution?

  • March 7, 2025
  • 1 reply
  • 0 views
I am 1099. I haven't filed tax yet. How should I report on tax 2024? What forms should I fill out with the brokerage. Thanks! This is somewhat continuation from my previous post, but for some reason, I can't sign back in and reply, etc. other than make new post.
    Best answer by dmertz

    I assume that because you mention Net Earnings, you are a sole proprietor.  With no net profit, no solo 401(k) is permitted.  Unless corrected by a proper return of excess contribution, the contribution is subject to a 10% (not 6%) excess contribution penalty on Form 5330.  TurboTax does not support Form 5330.

     

    You need to ask the brokerage what you need to do to obtain a return of the excess contribution.

    1 reply

    dmertzAnswer
    Employee
    March 7, 2025

    I assume that because you mention Net Earnings, you are a sole proprietor.  With no net profit, no solo 401(k) is permitted.  Unless corrected by a proper return of excess contribution, the contribution is subject to a 10% (not 6%) excess contribution penalty on Form 5330.  TurboTax does not support Form 5330.

     

    You need to ask the brokerage what you need to do to obtain a return of the excess contribution.