ForumsSolo 401k – EligibilityPlanning for the end of the backdoor Roth?

Forums Solo 401k Solo 401k – Eligibility Planning for the end of the backdoor Roth?

  • Planning for the end of the backdoor Roth?

    Mark Nolan replied 2 years, 5 months ago 2 Members · 5 Posts
  • 4 Replies
  • Top SubjectSolo 401k – Eligibility
    Top ForumsSolo 401k – Eligibility

    emily crag
    Top SubjectSolo 401k – Eligibility

    November 16, 2021 at 10:57 pm

    I’ve been using the mega-back-door Roth to max out my employers 401K with voluntary after-tax contributions. If we lose the backdoor Roth, can I pick up part-time 1099 work and use a solo 401K to max out using additional pre-tax contributions (whether they are labelled employee or employer contributions)? This would be for 2022, so $27K employee pre-tax and $20K employer pre-tax would go into my regular 401K, then I’d want to put an additional $20K pre-tax into a solo 401K (for a total of $67K). If this is possible, how much would I have to earn in the 1099 job or both jobs combined?

    emily crag
  • Mark Nolan

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

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    November 17, 2021 at 8:19 am

    Yes, the 401k rules allow for contributions to multiple 401k plans (e.g., a day time job employer 401k & and a self-employed solo 401k) but certain rules apply. https://www.irs.gov/retirement-plans/how-much-salary-can-you-defer-if-youre-eligible-for-more-than-one-retirement-plan

    Essentially, the employee contribution if made as a pretax contribution or Roth contribution (e.g., $19500 for 2021) is aggregated between all 401k plans (i.e., your day time job 401k and your self-employed solo 401k). This means you are capped at the $19,5000 mark between both plans, so you would not qualify to make additional employee pretax or Roth contributions to a solo 401k plan if you already maximize the $19,500 to your day time employer’s 401k.

    HOWEVER, this same aggregation contribution rule does not apply to employer profit sharing contributions. As such, yes you can make employer profit sharing contributions to a solo 401k even if your employer also makes employer profit sharing contributions to your day-time job 401k.

    For example, if you make $100,000 of line 31 Schedule C income from your self-employed business, you can contribute for 2021 an amount of $18,587.05 as a profit sharing employer contribution to your solo 401k and immediately convert this amount to the Roth solo 401k. For more information VISIT HERE.

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