Author Topic: solo 401K help!  (Read 748 times)

catccc

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solo 401K help!
« on: August 31, 2016, 10:05:30 AM »
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?