Self employed 401k contribution limit

[conpewter]

I would appreciate some advice on how to maximize how much I can put into my wife's solo 401k  Ideally I would put all of her earnings into the 401k
Giving some rounded numbers
2019 earnings after expenses 24k
2019 self employment taxes $2k
Net earnings 22k

Can I put 19k in as a salary deferral and then 25% of 24k for employer contribution (so with net earnings of 22k, would be 5.5k max)
So would I be able to put in the other 3k as an Employer contribution to knock her income tax liability to 0?

[dandarc]

I'm assuming your wife is a sole proprietor until told otherwise. If you don't want to fill out the worksheet yourself (https://www.irs.gov/pub/irs-pdf/p560.pdf), the calculator here seems to be pretty good:

https://obliviousinvestor.com/solo-401k-contribution-calculator/

Says $20,652 for exactly $24K of net income. But there are a host of things that you may or may not have going on such as other jobs in the mix, so your best bet is to look at the worksheet and figure it out with your own numbers.

[conpewter]

You are correct, sole proprietor, no other jobs just running her business, very small expenses, some deductions for mileage.

That calculator is really great, thank you!

[dandarc]

The soloK already exists, right? Because it had to be created and the employee-side deferral formally declared before 12/31/2019. You have until your tax filing deadline, plus extension if applicable to actually make the contribution, but wife technically is supposed to have a form that says something like "I wish to defer $19,000 to the soloK for 2019" on file by that date.

[terran]

In addition to the calculator above, I would suggest confirming with the "official" calculation which you can find by completing the worksheet on page 22 of Publication 560.

The soloK already exists, right? Because it had to be created and the employee-side deferral formally declared before 12/31/2019. You have until your tax filing deadline, plus extension if applicable to actually make the contribution, but wife technically is supposed to have a form that says something like "I wish to defer $19,000 to the soloK for 2019" on file by that date.

This is true for 2019, but for future reference plans can now be started by the tax filing deadline (~4/15) including extensions (~10/15) of the year for which you'd like to contribute thanks to the SECURE act (more like IRAs):

Section 201. Plans Adopted by Filing Due Date for Year May Be Treated as in Effect as of Close of Year

The legislation permits businesses to treat qualified retirement plans adopted before the due date (including extensions) of the tax return for the taxable year to treat the plan as having been adopted as of the last day of the taxable year. The additional time to establish a plan provides flexibility for employers that are considering adopting a plan and the opportunity for employees to receive contributions for that earlier year and begin to accumulate retirement savings.

Source: https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SECURE%20Act%20section%20by%20section.pdf
 

The amendments made by this section shall apply to plans adopted for taxable years beginning after December 31, 2019.

Source: https://www.govtrack.us/congress/bills/116/hr1865/text

[dandarc]

Thanks - I did not know that. One less thing to worry about if I ever take a W-2 job again, close down the SoloK, and later want to go self employed again.

[conpewter]

Thanks!  Yes the solo 401k was opened prior to the end of the year.
And thank you for the link to the publication I"ll work through the numbers there too so I can double check.