Author Topic: How to contribute to 401k for 2019/Was partially self employed/2 employers  (Read 364 times)

zoochadookdook

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« Last Edit: November 15, 2019, 01:46:37 PM by zoochadookdook »

dandarc

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Re: How to contribute to 401k for 2019/Was partially self employed/2 employers
« Reply #1 on: November 13, 2019, 02:37:38 PM »
#1 - if you can make it happen with payroll, do the $6400 to the 401K at work.

#2 - figure your business profit out - fill out a schedule C. You can open an individual 401K and use up the remainder of your annual contribution space and possibly some employer side as well there. You have to have the plan in place by 12/31 of this year, so get on that.

#3 - Finish up the Roth IRA as you've mentioned.

Quote
I'm thinking if a SEP is pre tax/a write off-contributing my entire self employment income to maxing a SEP for 2019 makes sense IF

This, is not actually an option. SEP is employer-side only money and is limited to 20% of your profit less 1/2 self employment tax (assuming you're taxed as a proprietor here - if you're an S-Corp, then it is 25% of your W-2 income). So there's no way to contribute the entire self employment income to a SEP IRA. You can, as mentioned above, do an individual 401K, and you might get close to that.

zoochadookdook

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Re: How to contribute to 401k for 2019/Was partially self employed/2 employers
« Reply #2 on: November 13, 2019, 02:52:34 PM »
#1 - if you can make it happen with payroll, do the $6400 to the 401K at work.

#2 - figure your business profit out - fill out a schedule C. You can open an individual 401K and use up the remainder of your annual contribution space and possibly some employer side as well there. You have to have the plan in place by 12/31 of this year, so get on that.

#3 - Finish up the Roth IRA as you've mentioned.

Quote
I'm thinking if a SEP is pre tax/a write off-contributing my entire self employment income to maxing a SEP for 2019 makes sense IF

This, is not actually an option. SEP is employer-side only money and is limited to 20% of your profit less 1/2 self employment tax (assuming you're taxed as a proprietor here - if you're an S-Corp, then it is 25% of your W-2 income). So there's no way to contribute the entire self employment income to a SEP IRA. You can, as mentioned above, do an individual 401K, and you might get close to that.

#1 shouldn't be an issue as i've already spoken to them

#2 so an individial 401 is post tax? I was assuming there was a similar tax benifit account that I could take advantage of/combine to my employer (current/going forward) 401k as I wouldn't see much of a point to funding a seperate self employed account I wouldn't be compounding to in the future. Realistically If I don't take any write offs it'd be 20k profit; but I wouldn't do that unless I could tax advantage all of that vs take home.

Thanks,
 
I appreciate your time.

dandarc

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Re: How to contribute to 401k for 2019/Was partially self employed/2 employers
« Reply #3 on: November 13, 2019, 02:57:25 PM »
You can go traditional or Roth with the solo 401K for the employee side money, provided that the plan you set up has a Roth Option. Most of your major brokerages can help you with this and their default plans have a Roth option.

Employer side contributions will always be traditional.
« Last Edit: November 13, 2019, 02:59:26 PM by dandarc »

zoochadookdook

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Re: How to contribute to 401k for 2019/Was partially self employed/2 employers
« Reply #4 on: November 13, 2019, 03:33:42 PM »
You can go traditional or Roth with the solo 401K for the employee side money, provided that the plan you set up has a Roth Option. Most of your major brokerages can help you with this and their default plans have a Roth option.

Employer side contributions will always be traditional.

We're just speaking in terms of the self employment correct?

For my current employer they offer roth/traditional as well which gives me another variable choice to make hah. I mathed it out and I could do 4057 exactly traditional the next 2 months.

dandarc

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Re: How to contribute to 401k for 2019/Was partially self employed/2 employers
« Reply #5 on: November 13, 2019, 03:37:56 PM »
Right - for the plan through your regular W-2 job, they offer what they offer. Roth vs. traditional is typically just "marginal rate I know I'm paying now" vs. "marginal rate I think I'll pay in the future". Don't agonize over the decision either - you won't know if you made the right call for decades and it is Good vs. Better. Not like "a mountain of cocaine" is one of the choices you're considering here.

With an individual 401K, you have decisions to make when setting it up, and whether or not the plan allows for Roth contributions is one of them.

Since you're going to have self employment income ongoing it sounds like, I'd say it is probably worth the trouble to set that up.