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rules for individual 401K
Old 09-04-2007, 06:01 PM   #1
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rules for individual 401K

I am partly-RE'ed and do contracting work: both as a W-2 employee
of an agency and as a actual consultant (with 1099 compensation).

The agency's 401K sucks, so I'd like to setup an individual-401K with
my broker. I imagine I can contribute to the individual-401K from
the 1099 work, but I wonder if I'm limited to the total 1099
compensation (if it's below $15K) or if I can I contribute more based
on the W-2 income.

I'm guessing, ballpark, I'll have $10K 1099 compensation and $30K
W-2. So am I limited to $10K in the individual 401K, or can I max
it out ?


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Old 09-05-2007, 06:47 AM   #2
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I don't know, but I bet Fido could tell you.

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Old 09-05-2007, 11:58 AM   #3
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Have you tried to track down your answer at the IRS web site? They have a search engine on their site.
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Old 09-05-2007, 01:03 PM   #4
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You can set up a 401k for your self-employment income (often called a "solo 401k"), but you would be limited to your self-employment income for your contributions. Also, if you participate in your employer's 401k, your total deferrals for all plans cannot exceed the maximum ($15,500 if you're under 50).

Your favorite local plan provider or CPA can give you more details.
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Old 09-05-2007, 05:42 PM   #5
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As trirod says, your self employed solo401k is limited to maximum of your self employment income. Here is the applicable pub: Publication 560 (2006), Retirement Plans for Small Business

Here is a good article that explains in plain English how to figure out your maximum contributions when you have more than one 401k plan: Common Questions About Retirement Plans

This article is consistent with the IRS publications I have read. Basically, your voluntary, employee contributions are limited to an aggregate of 15,500 (plus 5000 if 50 or over). But, you may be able to designate employer contributions to effectively put more in your 401k plans.

No more lawyer stuff, no more political stuff, so no more CYA

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Old 09-06-2007, 11:23 AM   #6
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Thanks, folks !

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