Question

My Single member LLC is taxes as an S-Corp. I have a solo 401K. Is the amount i contribute to my 401K dependent on my annual (W-2) salary?

Forum|Forum|7 years ago
June 5, 2019
1 reply
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I yielded $20K in my first year. Can i still contribute $18K to my solo 401K, or is the amount i'm allowed to contribute dependent on my salary?

TurboTax Free Edition Online

D

dmertz

Employee

The maximum amount your S corp can contribute to your 401(k) as the employer contribution is 25% of your W-2 compensation.

If you were under age 50 in 2017, your maximum employee elective deferral is $18,000 or your available W-2 compensation after subtracting any taxes withheld, whichever is less. (Your total of elective deferral, tax withholding, Social Security tax and Medicare tax cannot exceed your compensation.) However, your election to make an elective deferral was required to have been made by December 31, 2017. Under Department of Labor regulations, the deposit of your elective deferral should have been made by January 15, 2018.

J

Jerry0000Author

So even if your total W-2 salary is $20K, you can still take a maximum elective deferral of $18K? And on top of that the company can contribute an additional 25% of my W-2. IS that correct? Note, This is assuming a total net profit of $40K for the year ($20K in W2 earnings and $20K retained by the company).