Author Topic: Solo 401k - Net Income Definition  (Read 228 times)

kenmoremmm

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Solo 401k - Net Income Definition
« on: November 05, 2018, 10:45:09 PM »
I suck at reading IRS pubs. Can someone give me the quick and dirty on Solo 401k's definition of net income? Is it basically gross income - work expenses - taxes? Is your self-direction contribution to the 401k ($18500 limit) part of this? What about the profit sharing portion ($37500 max)?

This IRS form seems most appropriate: https://www.irs.gov/pub/irs-pdf/p560.pdf --- specifically page 22 of the PDF.

I am trying to figure out what my limit is for contributing to the 401k profit sharing side. I know it's capped at 20% of your net income, so how this number is calc'd is quite important. I would be looking at self-employed for my emplyment classification.

jacoavluha

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Re: Solo 401k - Net Income Definition
« Reply #1 on: November 06, 2018, 08:19:09 AM »
https://docs.zoho.com/sheet/published.do?rid=hd3vb2c79aa2e630443d58a05e8140934898a

use this spreadsheet to calculate your allowed contribution amounts to your solo 401k
note you have to change the inputs in the upper section to reflect current figures for social security wage base, elective deferral limits, and annual plan addition limit for 2018

is your only income, from self employment? Do you participate in any other retirement plans, if you have another job?

kenmoremmm

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Re: Solo 401k - Net Income Definition
« Reply #2 on: November 06, 2018, 04:00:23 PM »
thanks for the link. i will study at home.

my goal would be 100% self employed (contractor position). so, no other income sources.