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  • Mega Back Door Roth

    George Blower replied 2 years, 10 months ago 2 Members · 2 Posts
  • 1 Reply
  • Top SubjectSolo 401k Contributions
    Top ForumsSolo 401k Contributions

    Arthur Ardolino
    Top SubjectSolo 401k Contributions

    July 4, 2021 at 3:53 am

    I found your website and this strategy seems very promising. I am currently self-employed (have my own C-Corp, I’m the only employee) and I have a Solo 401K through Vanguard with a Roth option.

    I am considering getting a new job with a higher salary and their own 401K, but with a higher salary comes higher taxes. Here are my questions. If you can help answer I would appreciate it. These would assume I would switch my Vanguard 401K plan to your 401K plan.

    (FYI I looked here: https://www.mysolo401k.<wbr>net/wp-content/uploads/2021/<wbr>02/Mega-Backdoor-Roth-Deep-<wbr>Dive-S-corporation.pdf, but didn’t find my exact example, or need clarification).

    My question is, how much can I contribute to my Solo 401K in after-tax voluntary contributions? Do I have to continue to pay myself from my C-Corp, or can I still contribute somehow even without a salary?

    This is my current understanding – let me know if I am wrong:

    – Total employee salary deferrals/contributions cannot exceed 19.5K across ALL 401K plans.
    – Employer contributions cannot exceed 25% of salary paid by that employer.

    – Total employee + employer contributions across ALL 401k plans cannot exceed 58K.

    – Voluntary after-tax contributions are not dependent on salary, and can be made as long as total employee + employer + voluntary after-tax do not exceed 58K.

    -I would have to make sure that all contributions across both 401Ks do not exceed 401K. I’m assuming I would do this by looking at what is contributed to my “day job 401k” and then decide what to contribute to my Solo 401k.

    Thanks so much in advance. If I get this new job, your plan seems like a no-brainer, providing I can take my after-tax dollars from my new job and put those in my Solo 401K as after tax contributions. I just don’t know what I would have to continue to pay myself from my own company in order to do that.

    Arthur Ardolino
  • George Blower

    Top SubjectDaily Live Webinar,Solo 401k
    Top ForumsDaily Live Webinar, Solo 401k

    George Blower

    George Blower

    Top SubjectDaily Live Webinar,Solo 401k

    July 4, 2021 at 6:19 am

    @arthur-ardolino

    Top SubjectSolo 401k Contributions

    Thanks for posting your good questions!

    We need to correct and clarify the following points:

    1) The ability to make all types of contributions to the Solo 401k plan is based on your self employment compensation from your self-employed business (eg w-2 wages from your corporation). This means that you need w-2 wages from your corporation to make voluntary after-tax contributions to the Solo 401k (eg, you may contribute 100% of the w-2 wages from your self-employed business taxed as a corporation as a voluntary after-tax contribution not to exceed $58,000 for 2021 REDUCED BY any employee or employer contributions made to the Solo 401k).

    2) The overall contribution limit to the Solo 401k does not consider employee contributions made to the Solo 401k (it is possible to contribute more than $58k if you also make contributions to a “day job” 401k; see more here:https://youtu.be/23B6G_TgtMs). The sum of employee, employer and after-tax contributions made to the Solo 401k can’t exceed the lesser of your self-employment compensation (eg w-2 wages from your business taxes as a corporation) or the overall limit (eg $58k for 2021).

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