If your business is incorporated, you can count these contributions as a business expense. If your business is not incorporated, you can generally deduct employer contributions (which include employee contributions) for yourself from your personal income. So if you max out your contributions to a different employer-sponsored 401(k), you may only be able to make employer contributions to your solo 401(k).Įmployee contributions are tax-deferred and should be made no later than December 31 (sole proprietors and single member LLCs have until the tax-filing deadline for the year, generally April 15) employer contributions can't be made any later than the tax-filing deadline. Keep in mind that if you have access to a 401(k) plan, your employee contribution limit applies across all plans, not per plan. As an example, a consultant under 50 with earned income of $100,000 can put in $22,500 as an employee and up to $25,000 (25% of $100,000) 3 as the employer for a total of $47,500. 2 The IRS limits the amount of compensation that determines retirement contributions for 2023, the limit is $330,000.
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