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K1 /1099 income for solo 401k

Home Retirement Accounts K1 /1099 income for solo 401k

  • Avatar Emucansado 
    Participant
    Status: Physician
    Posts: 1
    Joined: 07/17/2019

    New to posting, but longtime reader.

    I am in my first year in practice in a surgery subspecialty. I max out backdoor roth IRAs for my wife and I, and an HSA. I have w2 income from my practice and max my employee 401k contribution with plans to max the employer contribution when I become a partner in January (self-funded employer contribution). About 8 of the partners also own a surgical center (separate company) which I will also buy into in January which kicks out over $100k of K1 income each year to each partner.  I already participate in a local group of docs that provide call coverage for a local hospital group as a contractor. That group is a partnership and about 9 of the 15 partners are from my practice. The income from that (for the docs in my practice at least) flows from that partnership to my practice and is distributed as w2 income to me (I think the outside partners get cut a check from the call partnership directly).

    I would like to open a solo 401k to shelter additional retirement income beyond the practice 401k, roth IRAs, and HSA. Am I able to use the K1 income from the surgery center to do this? if not can I use my side gig doing call to open one? Would we have to change  that to 1099 income from w2 in order for me to do this? Are there any drawbacks to this approach? Thanks for any advice.

    #231319 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2381
    Joined: 03/01/2018

    the K1 surgery center would not be eligible for solo 401k. This is not earned self employment income.

    the call pay might be eligible for solo 401k if paid to you as 1099 instead of flowing through to your W2 but you would want to make sure that there were no affiliated service group issues. ASG issues can be quite complex. But there are lots of us private practice docs running solo 401ks from 1099 call pay.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #231327 Reply
    Liked by Peds
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4442
    Joined: 01/08/2016

    No.

    #231345 Reply

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