Rich Carreiro wrote:

- quote -

Ah, thanks for the clarification.

-Will

william dot trice at ngc dot com

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Will Trice <wtrice[at]notmonitored.com> writes:

- quote -

According to Fidelity both the "employee" and "employer" contributions
to a Solo 401(k) must be made by your filing deadline plus extensions.
In a footnote they say that plans covering employees other than the
owner and owner's spouse are subject to the "15th business day after the
month in which the salary deferrals are withheld".

--
Rich Carreiro rlc-news[at]rlcarr.com

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Tad Borek wrote:


- quote -

I looked into a solo 401(k) a couple of years ago, I thought there was
an earlier deadline for the employee portion of the contribution,
something like "the 15th of the month after receipt of salary,"
effectively making this 1/15 since a sole proprietor is considered to
have received salary on the last day of the year? Is this still the
case (or was it ever the case)?

-Will

william dot trice at ngc dot com

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On Feb 14, 7:42*pm, Tad Borek <bore...[at]pacbell.net> wrote:

- quote -

Thanks Tad. I am familiar with soloK plans, but I wasn't aware they
allowed the discretionary freedom you describe when it comes to
employer/ee contributions. I'll have to look further into it.

Thanks again.

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kastnna wrote:
- quote -

These really have changed the landscape for sole-pros and single member
LLCs (or those including only a spouse). They can open up a solo-401k
plan and it's like this on the forms - similar to SEPs:

Employer: John Smith
Plan Administrator: John Smith
Participant: John Smith

At contribution time John Smith fills out a form that says $15,500 is
salary deferral, and $10,000 (or whatever it is) is an employer
contribution, and includes a $25k check. It's all a fiction of course
because there isn't any salary really when you're sole-pro, but the
rules allow it. Like a SEP you can fund as late as the return's extended
due date, as long as the plan is open by 12/31 of the tax year.

But...these are solo plans, with one non-spouse employee you're probably
back to the hassles of a typical 401k plan. Note that all of this is set
by the plan documents so you need to find a custodian offering them,
though they've become quite common.

-Tad

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On Feb 14, 1:36*pm, Tad Borek <bore...[at]pacbell.net> wrote:

- quote -

Tad,

How does one setup a 401k for themselves without a corporate entity of
some sort (if that is what you are saying)? I don't think I've ever
encountered this any you've piqued my interest.

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On Feb 14, 4:39*pm, Bill Woessner <woess...[at]gmail.com> wrote:
- quote -

Oops. That's not right. I don't know what I was thinking. Solo 401k
contributions are not SECA exempt, regardless of whether they're
employEE or employER contributions. Sorry.

--Bill

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On Feb 14, 12:16*pm, jIM <noreplysoc...[at]hotmail.com> wrote:
- quote -

The easiest thing to do is just up your 401k withholding. You have
another $8k to go before you hit the limit. That would go a long way
toward eating up the $10k you get from coaching soccer. Between your
401k and 2 IRAs, you should be able to contribute $25,500 to
retirement accounts in 2008 ($41K if your wife works and has a 401k).
Are you looking to shelter more than that?

- quote -

Be careful on this one. Since you participate in your employer's
plan, your IRA deduction is limited. See pub 590, table 1-2 for
details.

- quote -

You could set up a solo 401k. I don't know if this is allowed, but if
you set it up so that it only receives employER contributions, then
you can also avoid payroll taxes, which is nice.

--Bill

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jIM wrote:
- quote -

You don't need an entity to use a SEP-IRA or 401k plan but you do need
to factor in the contributions to your other plan, and keep your eye on
those annual limits (in 2007 they were $15,500 in salary deferral,
$45,000 including employer contributions). With your unincorporated biz
there's no real "salary," so you end up making contributions that are
part salary deferral, part "employer" contribution. The limits are set
by the income of the business and some formulas - see Fidelity's site
for calculators.

You can still establish a SEP for 2007 incidentally, and fund it as late
as the extended due date of your return. Same funding deadline for a
401k but you need to have that set up (paperwork in) by 12/31.

As for who to advise on these questions...I'd suggest a local CPA who
does mostly tax work for sole-pros and small businesses. You may get
some other tax tips about that side-biz income, and the guy/gal will
have software like what I was using to spit out those tax scenarios in 4
seconds. Then shop the discount brokers for the best place to open the
actual accounts.

There used to be a great book from Nolo Press about all this but they
stopped updating it a few years ago.

-Tad

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On Feb 14, 1:42*pm, kastnna <kast...[at]auburnalum.org> wrote:
- quote -

Who is best occupation to answer these questions for me
1) lawyer
2) tax accountant
3) CFP
4) other

Because I was seeing the same thing when I perused the IRS web site.
Use the employer match or employer contribution to get around the
individual max.

Right now the 10k I earn goes into the Roth for me and Roth for wife.
Meaning that covers our yearly contributions and we balance the taxes
out at tax time from our day jobs. If I made this more on the up and
up, through an LLC or similar, I'd have more deductions (milage to and
from practices and games, per diem for tournament weekends, home
office expenses and similar). Not sure if the legal costs of the LLC
or similar would be offset by the tax return benefits.

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On Feb 14, 11:16*am, jIM <noreplysoc...[at]hotmail.com> wrote:
- quote -

Here's one thought:

solo401k plans and SEPs are quite popular in scenarios similar to
yours. However, both of these vehicles are employer sponsored, not
individually sponsored. Are you able and/or willing to establish a
legitimate company to channel your second job through?

The $15.5k limit is for employEE deferals regardless of the number of
jobs you have. However, there is another limit you should be concerned
with: the maximum TOTAL contribution limit. In 2007 it was $45k. So
although you, as an employee, can only contribute $15,500, your
employer could also contribute $29,500 on your behalf in the form of
non-elective profit sharing, employee contribution matches, and Social
Security integration.

In a "hobby-business" with no other employees, you are both the
employer and employee so the benefits really add up.

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I want to know the choices for deferring taxes on income for
retirement savings.

I know of 401k (and 403b) for workplace programs. What about second
jobs which are either LLCs, sole proprietor ships, or similar self
employed endeavors? This is for a second job, and I am looking for
options to defer income.

A friend and I were talking about this earlier in week. Our
situations are similar, but have enough differences where what applies
to one of us does not apply to other necessarily.

Me: I work for a publicly owned company, have a 401k, and send close
to 7k to this plan (before the match). I also max out my Roth (did
not know I could use a deductable IRA until this morning). I also
work a second job (coaching soccer) which clears me 10k per year.
Some of this is reported on a 1099, some of this is not. I have no
legal company set up. What would be my best choices to defer taxes on
this income (for retirement)? One follow up question will be if the
15500 401k limit interferes with the amount I can defer from a second
job.

Friend: He is a firefighter (works for township) and has a government
pension plan. I am not not sure if this is considered a 403b or 457
type plan or not. Neither did he. No other workplace retirement
plan, and I don't think he has an IRA set up (yet). He also owns his
own safety company (does training and workplace audits), and also
flips/rents houses when the other two don't keep him busy. The safety
company is a LLC. What choices would the LLC provide for deferring
income for retirement?

If there is a portion of IRS documents which cover this, please point
me there first (so I can do some research). Any other comments are
welcome.

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