how to make solo 401k contribution

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

how to make solo 401k contribution

Postby liuruyu » Fri Mar 15, 2013 10:42 pm

ok, so we finally did it. Rolled over DH's roll-over TIRA in Vanguard over to Fidelity's solo 401K plan. Now we just need to figure out how to make contribution to it.

1. I don't seem to be able to link our bank information online with the fidelity solo 401K account. So I assume I can only deposit DH's contribution in check form?

2. I would think Fidelity would want to see we have withhold the self-employment tax before we make the contribution, but how do we show that? I am very confused with how to contribute to the solo 401K. As we are most likely won't pay estimated self-employment tax throughout the year. Because what he makes is still very little compare to my take home. And his self-employment tax won't throw our federal tax off by 10%. Plus we don't really know how much he would make in 2013 yet. So looks like we would only make it in 2014 after 2013 is done and we know for sure how much his income is from his business.

3. Now, if we never paid any self-employment tax on his income for 2013, how do we reflect the self-employment tax on the tax return for 2013? I know we will file schedule C, then the net income will be carried over to the main 1040 form, then where do put in the solo401K contribution? and would turbo tax know how much self-employment tax to withhold after I provide those facts?

I am very confused on this subject, and not sure if I even explained myself clearly above. Any suggestion and advice is welcome and feel free to ask questions.
liuruyu
 
Posts: 18
Joined: Thu Jul 26, 2012 2:20 pm

Re: how to make solo 401k contribution

Postby livesoft » Fri Mar 15, 2013 10:57 pm

3. Schedule SE. TurboTax will know what to do. A 401(k) contribution does not reduce SS / Medicare tax.

I suggest reading at least 4 of the IRS publications this weekend: http://www.irs.gov/publications/index.html Pick any 4 of your choice. They are very enlightening.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 34189
Joined: Thu Mar 01, 2007 9:00 pm

Re: how to make solo 401k contribution

Postby lawman3966 » Fri Mar 15, 2013 10:58 pm

As I recall, Fidelity has a booklet dedicated to this exact topic. Unfortunately, I don't have a link or name for it.

You really should contact the solo 401K department at Fidelity about this, since doing this right is extremely important under IRS law. At least, that's what a Fidelity rep told me. You can make contributions on behalf of the employee and on behalf of the employer (which are the same person in this case). The contribution limit of each is determined by calculations specified by the IRS. For this reason, it's very important get the amounts right, and to accompany the payments with the right documentation.
lawman3966
 
Posts: 918
Joined: Sun Aug 10, 2008 1:09 pm

Re: how to make solo 401k contribution

Postby snowman » Sat Mar 16, 2013 10:48 am

There is a contribution form on their website you can download and you fill it out every time you make a contribution. Keep a copy for your records.

1. At this point in time, deposits into solo 401k can only be made via paper check (mail it or in person at your local branch).

2. Fidelity does not care about your SE taxes.

Call Fidelity rep, they will walk you through the process.
snowman
 
Posts: 293
Joined: Thu Jan 31, 2013 1:59 pm

Re: how to make solo 401k contribution

Postby Code Commit » Sat Mar 16, 2013 12:42 pm

snowman wrote:There is a contribution form on their website you can download and you fill it out every time you make a contribution. Keep a copy for your records.

1. At this point in time, deposits into solo 401k can only be made via paper check (mail it or in person at your local branch).

2. Fidelity does not care about your SE taxes.

Call Fidelity rep, they will walk you through the process.


+1. I was using Fidelity's solo-401k until 2011 (since 2005). You always had to fill a contribution form with a paper check. Also, although the form asks for employee contributions and employer contributions separately, Fidelity were not actually keeping track of it.

I have been using Vanguard's Individual 401k since 2012, which has a quite functional interface to make online contributions and keeps history of past contributions (with per employee, employer/employee breakdown). Of course, it has other limitations like not accepting rollover IRA's (Fidelity allows it).

Regardless, Fidelity or Vanguard don't care about your SE taxes.
Code Commit
 
Posts: 130
Joined: Mon Mar 04, 2013 12:42 pm

Re: how to make solo 401k contribution

Postby liuruyu » Sat Mar 16, 2013 1:16 pm

thx everyone. I actually found the contribution form (in our solo 401K application package, excuse my stupid moments!). Yes, like PP pointed out, it does listed the separation of 401K contribution vs company matching. I don't think DH will make more than the 401K self contribution limit (17.5K) this year. And since we are taking income after SE to be his wage, so there won't be any company matching. But going forward, I will have to track them myself.

And yes, the only reason we opened solo at Fidelity is because they accept roll-over TIRA into the solo. . Hum... wonder if Vanguard allows us to roll the solo at Fidelity over? :) I really like the vanguard online interface more than fidelity (well, could it be I just need time to get used to it).

Thx again!
liuruyu
 
Posts: 18
Joined: Thu Jul 26, 2012 2:20 pm

Re: how to make solo 401k contribution

Postby Code Commit » Sat Mar 16, 2013 1:50 pm

liuruyu wrote: Hum... wonder if Vanguard allows us to roll the solo at Fidelity over? :)


Yes, it does (at least, the last time I checked - Jan 2012).
Code Commit
 
Posts: 130
Joined: Mon Mar 04, 2013 12:42 pm


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: abyan, Bing [Bot], Exabot [Bot], EyeYield, Gill, huskerdoc2035, jj, RVD, Tecktser, trueblueky, wcmFun and 65 guests