Thanks for the responses! Here's what I'm hearing:
- I can open an individual 401k without taking any other steps first, like forming an LLC or anything like that.
- I can contribute up to $18k on my own plus some employer percentage (it doesn't matter because I won't even hit $10k, most likely). This means I can put in everything I make!
- I still have to pay self employment taxes, but contributions I make are pre-income tax, so deductable.
Is this correct?
This sounds correct to me, but I've just started setting my own individual 401K up this very week. I have a side gig that brings in about 10-15k/year. I first considered a SEP IRA (much easier to set up) but decided there would definitely be some years I could contribute more than the ~2K SEP IRA limit (note, that is the % limit on MY income...if my income where higher, I could contribute more).
Whereas, the 401K will allow me to contribute nearly all my side income in the years I am able because the percent limits don't apply. There are online calculators that will figure out how much you can contribute in each case.
Re: over-contributing, I haven't looked into it in detail yet, but I THINK you have until April 15th of the following year to make contributions once the plan is place. So my current plan is to slightly under-contribute, and (if possible...again not sure exactly how this works) make a catch-up payment once I do taxes in Feb/March of the following year.