Individual 401k Contribution Limit - How to Calculate for Sole Proprietor

[keyfort]

Edit: I think using p560.pdf of the IRS's form, page 23, I have figured it out, but it sure was complicated at the beginning!

And the thing I was missing was that you can only take 20% as a maximum contribution rate for self employed, apparently, and then you have to use the IRS rate table to get that as a fraction, not just use 0.2! If I've read it right...

[fyre4ce]

Edit: I think using p560.pdf of the IRS's form, page 23, I have figured it out, but it sure was complicated at the beginning!

And the thing I was missing was that you can only take 20% as a maximum contribution rate for self employed, apparently, and then you have to use the IRS rate table to get that as a fraction, not just use 0.2! If I've read it right...

The rate table throws people off sometime. It's important to realize that the maximum 25% and 20% are actually the same number. The 25% is not counting the contribution, and the 20% does count the contribution. For a simple example, if you earn $100k from the business after subtracting 1/2 SE tax (Line 3 in the worksheet you reference), then you can contribute $20,000, which is 20% of total net business profit, and 25% of what's left over after the contribution is subtracted ($80,000).

[aristotelian]

I use the calculator on the Oblivious Investor website and then confirm using Turbotax when filing. They always come out the same.

[Investing.Newbie]

Fidelity has a solo 401K calculator: https://scs.fidelity.com/products/mobil ... bile.shtml Hope this helps !