Thanks for all the input thus far- keep it coming! I am devouring the info. and so grateful for everyone's input.
A couple of clarifications.
My SO does not get any benefits except what is required by law. So, there is no health care, no vacation days, no paid sick days, no retirement, no disability, no life insurance, etc.- nothing except employer-paid FICA taxes (and probably a few things we're unaware of- maybe liability insurance, unemployment insurance, etc.). He has a high-deductible healthcare plan that he purchases individually.
So the costs are probably: extra taxes, equipment/supplies, equipment depreciation, utilities that are used for home office that wouldn't otherwise be used, and any state taxes or insurance requirements.
Getting a new job is not an option- we are moving cross-country for a job I got, but that job only lasts one year and is non-renewable, and we plan to move back. So it just doesn't make a lot of sense for him to find a new job.
He is not concerned about the risk of the company cutting off his contract.
He does not need any of the money to live off of.
Is $17,500 + 0.2 * 60,000 (or whatever the final amount is) = the max he can put away in a solo 401K? I am trying to read the IRS rules, but I've never been great at understanding the IRS' website.
It sounds like even if he gets no additional pay, the ability to do a $28k solo 401K and reduce his taxable income still likely outweighs the costs of having to pay the extra FICA taxes. Is that correct?
It also looks like he could deduct his health insurance premiums, as well as any non-reimbursed expenses relating to the business services he provides for the company. Is that correct?
Other thoughts, given these clarifications?