I want to max out my employer contributions to my solo 401k for 2022 but am unsure about the max contribution limits. I have a 403b (employer 1), 401k (employer 2) and solo 401k (1099 income).
Does the 401(k) Employee & Employer Contributions limit of $61,000 apply to all of these cumulatively or does each get a $61,000 limit since they are "unrelated employers"?
Can I contribute any more employer contributions to my solo 401k for 2022?
1099 Income: $182,932
Expenses: $8,009
Net 1099 income:$174,923
1. Employer 1 403b
- Employee contributions: $15,720
- Employer contributions: $9,040
2. Employer 2 401k
- Employee contributions: $5,124
3. Solo 401k
- Employer contributions: $38,279.00
Thanks for your help!
401k/403b Contributions
- ruralavalon
- Posts: 26297
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Re: 401k/403b Contributions
IRS, "How Much Salary Can You Defer if You’re Eligible for More than One Retirement Plan?", link "Although a plan's terms may place lower limits on contributions, the total amount allowed under the tax law doesn’t depend on how many plans you belong to or who sponsors those plans."boglelover77 wrote: ↑Sun Mar 19, 2023 8:58 am I want to max out my employer contributions to my solo 401k for 2022 but am unsure about the max contribution limits. I have a 403b (employer 1), 401k (employer 2) and solo 401k (1099 income).
Does the 401(k) Employee & Employer Contributions limit of $61,000 apply to all of these cumulatively or does each get a $61,000 limit since they are "unrelated employers"?
Can I contribute any more employer contributions to my solo 401k for 2022?
1099 Income: $182,932
Expenses: $8,009
Net 1099 income:$174,923
1. Employer 1 403b
- Employee contributions: $15,720
- Employer contributions: $9,040
2. Employer 2 401k
- Employee contributions: $5,124
3. Solo 401k
- Employer contributions: $38,279.00
Thanks for your help!
Michael Kitces, "Coordinating Contributions Across Multiple Defined Contribution Plans", link. "However, unlike the 402(g) limit which applies once across all plans, the 415(c) overall limit applies separately for each plan."
Ed Slott, "MAKING SENSE OF THE 401(K) MULTIPLE PLAN LIMITS", link. "But, if you are in two plans sponsored by unrelated companies, you get the benefit of a separate overall limit for each plan.
Note: For small employer plans [like solo 401(k) plans and SEPs], the rules are more complicated because of IRS deduction limits."
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: 401k/403b Contributions
I was wrong. It would be right except I forgot about the 403b exception. Unfortunately, because you can't have separate total limits if you have both a 401k and 403b plan, there is just one $61,000 limit across all three of your plans.Duckie wrote: ↑Sun Mar 19, 2023 8:24 pmSince they are "unrelated" they each get the $61,000 limit.boglelover77 wrote: ↑Sun Mar 19, 2023 8:58 am Does the 401(k) Employee & Employer Contributions limit of $61,000 apply to all of these cumulatively or does each get a $61,000 limit since they are "unrelated employers"?
This is still accurate.But the employee deferral limit of $20,500 is spread across all three. Your employEE contributions total $20,844 which is $344 over the $20,500 limit. That needs to be dealt with.
You and your employers have already contributed $29,884 to your W-2 401k and 403b plans, $344 of which is over the employEE deferral limit and must be removed. Given the 403b exception that leaves up to $31,116 room for you to contribute as the employER to your solo 401k. Since you have already contributed $38,279 you will have to remove the excess.You have net 1099 income of $174,923. I don't know if that is after the one-half self-employment tax reduction or not. If you file as sole proprietor you can contribute as the employER up to 20% of net income. That means your $38,279 contribution is already over the limit which is under $35,000. You will need to fix that, too.Can I contribute any more employer contributions to my solo 401k for 2022?
Edited because of 403b exception information.
Last edited by Duckie on Mon Mar 20, 2023 3:02 pm, edited 1 time in total.
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Re: 401k/403b Contributions
Perfect. Thank you both!
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- Joined: Sun Mar 19, 2023 8:20 am
Re: 401k/403b Contributions
I talked to my 403b provider and they said I was ok with the 402(g) limit since $3,065.87 was a required employee contribution. I was not aware that did not count towards the limit. Thanks for all of your help.
Re: 401k/403b Contributions
Right, the employEE limit covers elective deferrals, not mandatory deferrals. A required 401a pension-type contribution is not the same as an optional 401k/403b contribution.boglelover77 wrote: ↑Tue Mar 21, 2023 8:21 am I talked to my 403b provider and they said I was ok with the 402(g) limit since $3,065.87 was a required employee contribution. I was not aware that did not count towards the limit.
Okay, that $3065.87 required employee contribution takes care of what looked like a $344 employEE over-contribution. Good. And, that added to the $31,116 gets you up to $34,181 of space for your solo 401k employER contribution. But it's likely your $174,923 net income minus one-half of your self-employment taxes times 20% won't be under that $34,181, so you'll probably still have to remove some excess.