Solo 401k now a corporate employee - 401k limits?

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reallyconfused
Posts: 55
Joined: Thu Dec 11, 2008 2:13 am

Solo 401k now a corporate employee - 401k limits?

Post by reallyconfused » Wed Jul 20, 2011 6:36 pm

Here's the story...

Wife was self employed and had a solo 401k. She just accepted an offer with a corporate employer that offers a 401k.

1) Are the 2011 employee deferrals a total combined limit of 16,500 or can she defer 2x 16,500 (16,500 when she was self employed, and 16,500 as a corporate employee?

2) Employer deferrals: can she still defer the max 25% of the self employed income?

3) Can she transfer her solo 401k into a rollover IRA? This means she won't have to submit the special form to the IRS every year after the IRA balance increases over 250k?

Thanks in advance.

mschmitt
Posts: 74
Joined: Mon Aug 13, 2007 7:16 pm

Re: Solo 401k now a corporate employee - 401k limits?

Post by mschmitt » Wed Jul 20, 2011 7:30 pm

I'm not a expert, but this is my understanding:

1) The limit is 16,500 total combined.
2) Yes, she can still add 25% of the self-employed income.
3) Yes, she can transfer the solo 401k to an R-IRA.

I was in this position a couple of years ago and found the best solution was to max out the 16,500 on the W2 job (especially if there is an eployer match) and then add the 25% self-employed to the solo 401k. But, you're situation may be different.

reallyconfused
Posts: 55
Joined: Thu Dec 11, 2008 2:13 am

Post by reallyconfused » Wed Jul 20, 2011 10:03 pm

That's very helpful. Thanks for your post mschmitt!

By the way I agree with you - max out the employer 25% on the individual 401k side and put the 16500 on the W2 side for the match.

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