ForumsMega Backdoor Roth Solo 401kCalculating solo401k salary to max mega back door Roth.

Forums Solo 401k Mega Backdoor Roth Solo 401k Calculating solo401k salary to max mega back door Roth.

  • Calculating solo401k salary to max mega back door Roth.

    Mark Nolan replied 2 months, 4 weeks ago 2 Members · 2 Posts
  • 1 Reply
  • Top SubjectMega Backdoor Roth Solo 401k
    Top ForumsMega Backdoor Roth Solo 401k

    G Falt
    Top SubjectMega Backdoor Roth Solo 401k

    January 15, 2024 at 3:21 pm

    How do you calculate the S corp salary for you to be able to contribute max to solo 401k up to 66k mega back door Roth in solo 401k?

    I found an online calculator. https://obliviousinvestor.com/solo-401k-contribution…/

    Plugging in my situation there tells me I have to take 221,720$ from solo 401k as salary ? Does all of it have to be “reasonable salary” as 221,720$ or part of it can be “owners draw” or distributions ?

    I have a day job W2 making 150k a year.

    Rest is 1099 about 500k income.

    I do not contribute any single $ in w 2 employer 401k.

    Do I have to take difference of 221,720 – 150,000 = 71,730$ as reasonable salary from S corp ?

    I am doing the solo 401k first time this year. Thanks.

    Filing own taxes. Not using CPA.

    G Falt
  • Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    January 25, 2024 at 6:34 am

    Online calculators are not functional (smart enough) for calculating solo 401k voluntary after contributions. A reason is because the voluntary after tax solo 401k contribution is a dollar for dollar calculation not a percentage calculation like solo 401k employer profit sharing contributions.

    If your self-employed business is an S-corp, you would need to pay yourself $66,000 of W-2 wages from the S-corp in order to maximise your 2023 solo 401k voluntary after-tax contribution amount of $66,000. See the following: https://www.mysolo401k.net/how-much-self-employment-income-do-i-need-to-maximize-solo-401k-contributions-s-corp-c-corp-w-2-llc-taxed-as-scorp/

    Also, regardless if you also maximise your annual contributions to your day-time employer 401k, you could still make the full $66,000 voluntary after-tax contribution to the solo 401k as voluntary after-tax contributions are not aggregated between multiple 401k plans (i.e., your day job 401k and your self-employed business 401k). To learn more about the solo 401k voluntary after-tax solo 401k contributions, click here.

Related Blog Posts