"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> writes:

- quote -

That's not true of the profit-sharing part of a solo-401k.
That's limited to 25% of net profit (which for a sole prop
is actually 20% of net profit, because the profit-sharing
401k contribution itself reduces net profit).

The OP also said he had maxed out his salary deferral
(which unlike the profit sharing part is integrated
across all 401(k) plans the person participates in),
so he can only make a profit-sharing contribution
to his solo-401k.

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

--
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"John Bliss" <jbliss1234[at]gmail.com> wrote
- quote -


You're thinking 25% of ~net profit~ (after all expenses).

For a solo-401K it's up-to 100% (although it caps out at $42K I believe).





- quote -




Clearly there's room to make some contributions. Talk to your financial
advisor who is familiar with what's available along this line, and how it
interacts (if at all) with your former plan.




--
Paul A. Thomas, CPA
Athens, Georgia

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

For the first half of 2007, I was working as a full time W2 employee
at a company, and was laid off towards the middle of the year. By that
time, I had already contributed close to my limit of $15000 employee
contribution towards my employer's 401k plan.

After my lay-off, I started working as a 1099 contractor working for
several clients. My question is: Can I contribute a part of my 1099
income as profit sharing to a solo 401k (which I had already setup in
late 2007), and how much can I contribute. I have heard that usually
one can contribute 25% of gross income minus cost of goods sold (which
in case computer consulting would be nil) upto a maximum of $43000.
Because I have already maxed out my $15000 employee contribution, am I
still eligible to contribute a maximum of (43000-15000 = 28000) as
profit sharing of my 1099 income towards my solo 401k?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >