Individual versus Solo 401K

Home Retirement Accounts Individual versus Solo 401K

  • Avatar sbaker50 
    Status: Physician
    Posts: 1
    Joined: 01/11/2019

    I have about $10,000 worth of money from doing consulting work last year and was wanted to maximize the retirement potential of this new side gig.  Have a plethora of questions that I felt the group could help me out with, thanks much in advance!!

    I already have an ORP (Optional retirement plan), 403b, and 457 through my primary job and contribute to a Backdoor Roth account as well

    Can I contribute to either an Individual or Solo 401k with this extra side gig money? Don’t have an LLC for the side hustle.

    If I can contribute how much would be my max?

    #180410 Reply
    Avatar Peds 
    Status: Physician
    Posts: 3789
    Joined: 01/08/2016

    1- yes. they are the same. however youll have to learn which portion and how much. hint: tons of threads on this here.

    2- dont know, you didnt give us enough info. start here:

    #180463 Reply
    Avatar jhwkr542 
    Status: Physician
    Posts: 1142
    Joined: 02/15/2016

    You can, but with your 403b, assuming you’re maxing your employEE contributions, you’ll only be able to do profit sharing contributions, which would amount to 20% of (earnings less 1/2 SE tax), so you’d be saving a few hundred bucks in taxes for the hassle.  It might be worth it to you, especially if you need to rollover an IRA now or in the future.  Also, is this an ongoing gig or just last year?  If this were just a one year thing, I probably wouldn’t mess with it.

    #180489 Reply
    Avatar jacoavlu 
    Status: Physician, Small Business Owner
    Posts: 1998
    Joined: 03/01/2018

    to contribute to a solo 401k for 2018 the plan had to have been opened by 12/31/18

    you can open a SEP IRA for 2018 contributions, deadline is your tax filing deadline including extensions

    you can then open a solo 401k for 2019 and future contributions and rollover the SEP IRA to the solo 401k

    note: don’t open the solo 401k at Vanguard because their plan won’t accept a rollover

    you don’t need an LLC, it has no benefit but may have added costs

    The Finance Buff's solo 401k contribution spreadsheet:

    #180490 Reply
    Liked by Peds

Reply To: Individual versus Solo 401K

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear