Solo 401k in a year with a W2 401k

[Heroes821]

Ok, I'm currently Arguing with my CPA because his "software" doesn't match any calculator that I've yet found for my solo 401k can someone check my math?


Schedule C profit: $27,465

401k Contributions from W2 employer: $1188.08 Roth, $662.81 pre-tax.  W2 employer match (if it matters) $1,388.14.

According to my CPA my Form 1040 Line 28 shows $20,837 as the Max I can contribute before April 18th (October if I extend for the sole prop contributions)

using http://www.bcmadvisors.com/solo-401k-calculator
http://www.bankrate.com/calculators/retirement/self-employed-401-k-calculator.aspx
and https://personal.vanguard.com/us/SbsCalculatorController

I can't seem to Generate $20,837 even after subtracting the $1188.08 Roth from the totals on those Calculators.


I should be able to contribute up to 20% of schedule C profits to the solo 401k.

Running Vanguard Calc $27,465 Sole Prop @ 20% solo 401k max = $21,762.33 Subtrack the personal limit of $18,000= $3762.33 EmployER contribution.

BMC Advisor Breaksdown the half of SE tax etc and says the Max profit Sharing contribution is $5,104.93

Bankrate shows: $23,104 total -$18,000 = $5,104 Business contribution.

How is my Tax return showing a limit of $20,837?  If I add my Roth back in that is $22,025 - $18,000 = $4025 in Business contribution... If I add All the W2 contributions back in, including the w2 employer contribution I get $24076 - $18,000 = $6075. 

How are all these numbers different? 

My personal Math is that the 20,837 is the limit of 401k pre-tax contributions then I have to add back my 1188.08 Roth and subtract $18000 to reach my business contribution number.
This number is $4025.08.

So frustrating.

[DavidAnnArbor]

Make sure you've done the worksheet on page 22

https://www.irs.gov/pub/irs-pdf/p560.pdf

[Heroes821]

Printing that page now I will run it against the Docs from my CPA. Thanks!

[Heroes821]

Make sure you've done the worksheet on page 22

https://www.irs.gov/pub/irs-pdf/p560.pdf

Ok using that worksheet, I got $20,573.92 which is very close to the $20,837.  But that seems to answer my add the roth back in and subtract $18,000 to get my business contribution limit of $4025.

[DavidAnnArbor]

Ok now I see what happened.

So if you have an Excel spread sheet you can create your own worksheet and play with the numbers

Step 1   Net profit from Schedule C line 31      27465
Step 2    Subtract deductible part of SE Tax      -1940
Step 3   Net earnings from self-employment      25525
Step 4   Enter your rate, the maximum         0.2
Step 5   Multiply step 3 by step 4            5105
Step 6   Multiply 265,000 by plan contribution rate   66250
Step 7   Enter the smaller of step 5 and step 6      5105
Step 8   Contribution limit for 2016            53000
Step 9   Allowable elective deferrals made      16149
Step 10   Subtract step 9 from step 8            36851
Step 11   Subtract step 9 from step 3            9376
Step 12   Enter 1/2 of step 11                    4688
Step 13   Enter the smallest of step 7,10, or 12      4688
Step 14   Subtract step 13 from step 3         20837
Step 15   Enter the smaller of step 9 or step 14      16149
Step 16   Subtract step 15 from step 14                4688
Step 17   Enter catch-up contributions made             0
Step 18   Enter the smaller of step 16 or step 17             0
Step 19   Add steps 13, 15, and 18            20837

[DavidAnnArbor]

401k Contributions from W2 employer: $1188.08 Roth, $662.81 pre-tax. 

So your elective deferrals have already been $1850.89  leaving you a balance of $16,149.11 left to take as an elective deferral on your solo 401k plan, to bring you to $18,000 maximum allowed of elective deferrals across all 401k plans.

[Heroes821]

401k Contributions from W2 employer: $1188.08 Roth, $662.81 pre-tax. 

So your elective deferrals have already been $1850.89  leaving you a balance of $16,149.11 left to take as an elective deferral on your solo 401k plan, to bring you to $18,000 maximum allowed of elective deferrals across all 401k plans.

You rock! So since the $16,149.11 is accounted for that means my business or employER contribution can be: $20,837-$16,149.11 = $4687.89! 

[DavidAnnArbor]

401k Contributions from W2 employer: $1188.08 Roth, $662.81 pre-tax. 

So your elective deferrals have already been $1850.89  leaving you a balance of $16,149.11 left to take as an elective deferral on your solo 401k plan, to bring you to $18,000 maximum allowed of elective deferrals across all 401k plans.

You rock! So since the $16,149.11 is accounted for that means my business or employER contribution can be: $20,837-$16,149.11 = $4687.89!

Your CPA should answer that question so that you can make the correct investment into your Fidelity or Vanguard Solo 401k plan.

[Heroes821]

401k Contributions from W2 employer: $1188.08 Roth, $662.81 pre-tax. 

So your elective deferrals have already been $1850.89  leaving you a balance of $16,149.11 left to take as an elective deferral on your solo 401k plan, to bring you to $18,000 maximum allowed of elective deferrals across all 401k plans.

You rock! So since the $16,149.11 is accounted for that means my business or employER contribution can be: $20,837-$16,149.11 = $4687.89!

Your CPA should answer that question so that you can make the correct investment into your Fidelity or Vanguard Solo 401k plan.

Yeah, I can't imagine how busy CPAs were last weekend and this week, but I did get a hold of him yesterday.  Your math matched his math and it's solved with the above quote so that's what I sent over through vanguard.  Feels so under the wire...time to start contributing to 2017!

[DavidAnnArbor]

Yes I've already contributed my 1st Quarter of $6,000 to my Fidelity Solo 401k plan. I'm older so I get to make an employEE contribution of $24,000

My employER contribution won't be known until I know for sure my Schedule C profit, I'll probably calculate that in January 2018.