DH works part-time and does not have a workplace retirement plan. He also has a side gig, and cash flow is a few grand each year. It's a single member LLC, and he doesn't pay himself a wage from it, but takes owner draws occasionally.
I am wondering if it would be worthwhile to set up a solo 401K. If I'm understanding correctly, 100% of his side gig pay can be set aside, up to his max of $18K. The earnings from the side gig are no where near the $18K max. Let's just say the earnings after expenses are $3K. He also write off mileage and depreciation, so his taxable income is less than his book income, let's say that's $2.5K. Can he only contribute up to the taxable income amount? Would it be better if it was his biz contributed to it's max first (20% of earnings less
1/2 of the SE tax) and then he put in what was left?
I'm just looking for some tax advantaged options for investing. I already max out my 401K, and we both max out our IRAs. No HSAs available to either of us at this time.
Any thoughts?