Solo 401(k) Question

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anonenigma
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Joined: Thu Apr 21, 2011 11:58 pm

Solo 401(k) Question

Post by anonenigma »

At my day job I max out my 403(b) and 457(b). I also max out my Roth IRA.

I have a prospect for some substantial consulting work and understand that the Solo 401(k) would allow the greatest deferral - the annual employee amount plus an employer contribution of 25% of net income. Would any of these Solo 401(k) limits be affected by my 403(b), 457(b) or Roth contributions?
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Duckie
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Joined: Thu Mar 08, 2007 2:55 pm

Re: Solo 401(k) Question

Post by Duckie »

anonenigma, in 2013 the solo 401k limits (assuming under age 50) are $17.5K for employEE contributions and up to $51K for employER contributions. Whatever you contribute to your 403b at your day job will reduce your solo 401k employEE contributions but not your solo 401k employER contributions. See here.

Also check out IRS Publication 560. A solo 401k is a "qualified plan".
mah001
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Joined: Fri Sep 28, 2012 9:30 am

Re: Solo 401(k) Question

Post by mah001 »

Your 403b employee contributions reduce both the 17.5K and the 51K limits. Any employer contributions to the 403b will further reduce the 51K limit in your 401k. See sections 402(g) and 415 (especially 415(k)).
Topic Author
anonenigma
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Joined: Thu Apr 21, 2011 11:58 pm

Re: Solo 401(k) Question

Post by anonenigma »

Both Duckie and mah001 helpfully point out that my 403(b) contribution will cancel out my employee 401(k) contribution and lower the total limit. I understand.

Will the 457(b) contribution lower the limit again, or does this not come into play at all?

There's no employer contribution on either the 403(b) or 457(b).
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Duckie
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Re: Solo 401(k) Question

Post by Duckie »

anonenigma wrote:Will the 457(b) contribution lower the limit again, or does this not come into play at all?
No. The 457 plan is distinct from 401k/403b plans which is why you are allowed to contribute $17.5K to both the 403b and 457. See the section "Are there limits on elective deferrals?" here.

I'm not sure about this but I think the $51K limit is per plan. If you earned $250K at your consulting job you could contribute about $50K to your solo 401k plan as an employER contribution. (I think the self-employed limit is about 20%.) In addition you could contribute $17.5K each to the 403b and 457 plan as employEE contributions. Check this, because I may be wrong.
mah001
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Joined: Fri Sep 28, 2012 9:30 am

Re: Solo 401(k) Question

Post by mah001 »

I agree that the 457 plan does not affect the 401k, However, the $51k limit is reduced by the $17,500 contributed to the 403(b). The 415 limit is per each unrelated employer, not per plan. 415k4 says in effect for our situation the 403b plan is considered to be maintained by the same employer as the 401k.
moneyman11
Posts: 622
Joined: Tue Feb 19, 2008 10:09 am

Re: Solo 401(k) Question

Post by moneyman11 »

401k, 403b, 457b, solo 401k, sar/sep, Roth IRA, Roth 401k, IRA ....

What a complete mess our retirement savings system is.
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