Benefits of a solo401k for a side hustle if not maxing your 401k

[Gin1984]

Compared to just depositing in a traditional IRA?  As an example, you make $1000 in side hustle, are saving $10,000 in your employer's 401k, would you deposit in a traditional IRA, your employer's 401k or create a solo401k?

[Miss Piggy]

I don't quite see the point of opening a solo 401k for a side hustle if you're not maxing out your employer's 401k.

That said, I max my employer's 401k, then I add a bunch of money to my solo 401k based on what my accountant tells me I can add. (It's based on some percentage of net revenue I believe.) So I double-max because of having the solo 401k. (By double-max, I don't mean 18,000 x 2.)

[terran]

I don't quite see the point of opening a solo 401k for a side hustle if you're not maxing out your employer's 401k.

Generally, I would agree. A few benefits of a solo 401k are that you can easily find one with excellent investment options (vanguard and fidelity would be good choices) which isn't always true of an employer plan, and as long as you open it within the calendar year you can make contributions up to the tax filing deadline which you can't do with an employer plan.

Both of these advantages are also true of an IRA, however, so given the scenario the OP describes I wouldn't both with the solo 401k. Just contribute to the employer 401k if the investment options are good and you still have time to do it within the year given what you're paid, and if either of those aren't true use an IRA. Remember that there income limits to the deductibility of traditional IRA contributions.

[kpd905]

If I am already maxing my 401k at my day job, does the solo 401k have any benefits to me over a SEP IRA?  I opened the SEP at Vanguard in about two minutes just to utilize the employer contributions.  I only have about $3k of self employment income this year (tradelines).

[terran]

If I am already maxing my 401k at my day job, does the solo 401k have any benefits to me over a SEP IRA?  I opened the SEP at Vanguard in about two minutes just to utilize the employer contributions.  I only have about $3k of self employment income this year (tradelines).

The SEP would cause issues if you needed to contribute to a backdoor roth, but other than that they should be about the same if you're already maxing your employee contributions.