Solo 401k Questions

[Toad]

In my quest to maximize how much money I make and minimize how much I pay Uncle Sam, I have started looking into setting up a Solo 401k for myself this year.  My basic understanding of it is I can contribute a percentage of my net income (thinking it's 20%) of my side hustles into it.  I am already maxing out my main jobs 401k, so everything would be considered an "employer contribution".  A few questions I have:

1. Can I consider bank account bonus churning as income in this situation? --> I'm thinking yes since I have to pay taxes on it but wondering if anyone has done this before.  Will run this one by my tax people later on as well.

2. I have a secondary job (adjunct instructor) that I get a reasonable sum from each year (~7k).  I do not believe I am eligible for a 401k plan at this (need to double check), but would this be allowed to be considered as income for a Solo 401k?  For this one, I have a W-2, so am considered an employee, so thinking not, but figured I would ask.

3.  Is there a way to take advantage of a Solo 401k doing some sort of crazy financial jiu jitsu to effectively "contribute" in excess of the allowed 20%?  Thinking along the lines of mega backdoor Roth stuff (my main employer doesn't allow non-roth after-tax contributions).

[terran]

1) No, this is typically interest income for with you'll receive a 1099-INT. This is not self employed income.
2) No, if you receive a W2 you are an employee, not a contractor, so this is not self employed income.
3) Yes, it is possible to do the mega backdoor Roth. You won't be able to do this with any of the big plan administrators like Fidelity or Vanguard that provide free solo 401k's, but there are administrators that charge a fee that can set up a plan for you that allows mega backdoor Roth contributions. You'll still need self employed income though. See this thread: https://forum.mrmoneymustache.com/taxes/anyone-execute-a-mega-backdoor-roth-in-solo-401k/

If this is all the side income you have it sounds like you don't qualify. You'll need something that pays you on a 1099-MISC, most likely with Box 7: Nonemployee compensation filled out, or a business that receives payment from people not required to issue you a 1099. If you file a Schedule C you're good, if not, not so much (unless you're a corporation which has other forms, but same rules about income).

[Toad]

Thanks for the quick reply.

If this is all the side income you have it sounds like you don't qualify. You'll need something that pays you on a 1099-MISC

Nope, not all of it, just the things I thought were marginal.  Have some money coming in from mystery shopping but I can mostly offset that with expenses and mileage deductions.  Also have some coming in from other independent contractor work, but not much overall.  Probably on the order of 3-4k/yr currently.

So it sounds like my best course of action would be to do the Solo 401k, and start looking at the backdoor Roth only when/if my side income becomes notable (>10k or so).

[terran]

It doesn't matter how much self employed income you have for a regular backdoor Roth (IRA rolled over to Roth IRA) so I'm guessing you're talking about mega-backdoor Roth (after tax 401(k) rolled over to Roth 401(k) or Roth IRA). In that case, given the fees of the solo 401(k) administrator that would allow it, yeah, I would think you wouldn't want to do that until you had enough self employed income to justify the expense. I don't know what that amount would be, but it would be effected by your capital gains tax bracket both now and when you start withdrawing as tax on qualified dividends during accumulation and long term capital gains when you withdraw is the main thing you're avoiding by getting more money in to Roth.