solo 401k account opening questions

[Lilly Z.]

I just opened my S-Corp recently. It is chaos for me to understanding lots of new concepts related with S-Corp. In last month, my CPA told me since I can’t tell how much I can get for my company in the year, he can’t do payroll for me. So he said he will issue me 1099-NEC to me as a employee. Now, my question is,

if I am as the only employee of my S-Corp with 1099-NEC, Could I still contribute $20500 to the solo 401k, and my S-Corp still can contribute 25% of my 1099-NEC income? Or I have to be w-2 employee?

Thanks.

Lilly Z.

Contact

[Mark Nolan]

Who will be the PAYER on Form 1099-NEC? Please ask your CPA if you do not know.

Mark Nolan

Compliance Officer

Contact

1-800-489-7571 www.mysolo401k.net

[Lilly Z.]

I think it is my company. I own 100% of the company, and I am the only employee of the company. Why do you ask this?

I have another question. I am trying to open an account, but I saw that I will get another EIN for my solo 401k. But why should I get a new EIN for my solo 401k? Couldn’t I use my company’s EIN for the solo 401k account?

Thanks.

Lilly Z.

Contact

[Mark Nolan]

If the 1099-NEC is issued in the name of S-corp, then the solo 401k contributions will based on line 31 of the Schedule C, resulting in having to subtract 1/2 of self-employment income tax from the amount that will be used to calculate your solo 401k contributions. Therefore, you may want to consider discussing with your CPA in reporting W-2 wages as the 1/2 of self-employment income reduction does not impact the solo 401k contribution calculation when it is based on W-2 wages generated from one’s self-employed business.

Mark Nolan

Compliance Officer

Contact

1-800-489-7571 www.mysolo401k.net

[Mike Stanley]

Hi guys! Newbie here, thanks for accepting me.
interesting discussion and most importantly useful for me

Mike Stanley

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