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Worth it to Pay TPA for a Solo 401K Allowing NRATs?

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  • Avatar dval 
    Participant
    Status: Dentist
    Posts: 4
    Joined: 01/19/2017

    Thanks for getting into the weeds on this one, although if you clicked on the title, you knew what you were getting into.

    I’m a longtime lurker on the forum so a huge thank you to the regular posters for the helpful advice and insight.

    Background: I’m a fairly new grad dentist working two jobs. I’m married and our 2018 income was slightly below $315K after deductions and will likely stay the same for 2019.

    I work as a W2 and max out a 401K there. I also work part-time as a 1099 and for 2018 put as many employer contributions into a solo 401K at Fidelity that I could.

    With the recent clarifications regarding the 199A affecting sole proprietorships, I realize I’m not getting much benefit with these before-tax contributions since my marginal tax rate is 24%. Would I be better off just contributing more to my taxable account instead or would it be worth paying a TPA to amend my plan at Fidelity to allow NRATs? I have no idea how much that would cost. My 1099 net profit this year will be ~$100K.

     

    #189328 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016

    I d/n believe it w/b possible to give you the “better off” answer without running some sophisticated calculations.

    The provider we refer to charges $750 (last time I checked) to amend a plan. Of course, you’ll then have ongoing administrative costs, maybe ~$250/yr.

    Another consideration is that you probably won’t be at the 24% marginal tax rate for very long.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #189331 Reply

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