SEP IRA AND 401K SOLO

Forum|Forum|4 years ago
March 16, 2022
3 replies
13 views

Hi everyone. Thank you so much for taking time. Client,1099 independent contractor has high net income on schedule C, no EIN number and has no employee. I need a hint that can client to contribute in SEP IRA and 401k SOLO simultaneity before April 18 for 2021? Also, maximum 401k SOLO contribute is $58000 but I was wondering that ProSeries limits to $19500! I think I confused how to find the part of capacity of being employee ( 401K SOLO) in contribute worksheet and where should enter the capacity of being employer for SOLO about $58000? Hope someone can help to some get clarity.

ProSeries Professional

This topic has been closed for replies.

dkh

Level 15

see if this helps https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people

HOPE2Author

Level 7

Thanks. I already read it but my answer were not there.

qbteachmt

Level 15

I found an article that might be helpful:

https://www.solo401k.com/blog/can-i-contribute-to-a-sep-ira-and-solo-401k/

Don't yell at us; we're volunteers

T

TaxGuyBill

Level 15

In a nutshell, the employee portion is limited to $19,500, and that needs to be decided upon by December 31st of last year (but does not need to be deposited until April 15th).

The employee portion is limited to roughly 18%-19% of Schedule C profit. There is point in doing both a SEP and 401k because you still have the same limits.

Does that help at all?

qbteachmt

Level 15

The Employer contribution for the Solo 401(k) and the entire SEP amount (as it is considered an Employer contribution) is often not determinable until the business return is prepared (unless the client clearly made more than enough...), so that explains why the employer amounts have a due date of the due date of that tax form. And even though the Employer Solo 401(k) portion can be deposited after the end of the year, the plan needs to have existed prior to that year end and not by the due date of that tax form.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO