Maximize Your Retirement Contribution--Solo 401(K)

February 7th, 2021 at 7:58 AM

The key to a successful and substantial retirement plan savings is to initiate this program, as early as possible, and make wise investments as well.

If you want to maximize your retirement contribution, and your resulting tax liabilities---please consider the Solo 401(K).

Source 1 (You)--Elective Deferral Contributions

For 2021, you can contribute to your solo 401(K) account up to $19,500 ($26,000 if age 50 or older) of....your W-2 income if you are employed by your own C or S Corporation, or your net self employment income if you operate as a sole proprietor or as a single-member LLC that\'s treated as a sole proprietor for tax purposes.

Source 2 (Your Business)- Employer Contributions

In addition to the elective deferral contribution, the solo 401(K) arrangement permits additional employer contribution of up to 25% of your corporate salary or 20% of your net self employment income. Note the a 1 person business is both an employee and an employer for the solo 401(K).

Therefore, in most cases, the owner of a 1 person business can contribute MORE monies into a solo 401(K) than any other self-directed retirement plan.

Mark S. Fineberg, CPA