I'm in a slightly weird situation... briefly, the background is that my team/unit got spun off and sold to a new company, and the transition was handled very poorly so things are/were kind of a mess. The purchasing company did not have any offices in our state (or any other state besides California - fairly small company with ~25 employees). So they told us they would have to hire us on as 1099 contractors temporarily while they figured out things like health insurance in New York State and tax withholding with NYC/NYS and so on and so forth. (You don't have to tell me about this being a bit of a red flag. I already know. But it is the only red flag with them so far, so I'm rolling with it and hoping they'll stick to their word.)
I'm going to get slammed with taxes as a contractor in NYC. Marginal tax rate will be around 47% on my five-figure salary. So I'm wondering if it's worth opening a solo 401(k) and at what point it's worthwhile.
I have a pretty big taxable account (49k in muni bonds, 18k cash) and was thinking I could just use that to live on while shoving the 1099 salary into a 401(k). So if I get, say, $10k in 1099 income, I could just put it all in the 401(k) and avoid that onerous tax rate.
Questions:
Can I put in 100% of my earnings? Or do I still have to pay FICA/SE tax (15.3%) on money I put in a 401(k), or are there some other limits?
Can I open the solo 401(k) later, after I find out exactly how long I will be on 1099, or do I have to donate as I earn? (I don't want to max out my account now and then get hired as W2 employee a week later and find out they would have matched it all if I'd waited.)
Would putting 100% of my earnings in cause problems with anything else, like being able to deduct expenses? I.e., if I earn $5000, and put all $5000 into a 401(k), can I still deduct $500 for health insurance?