Join Early Retirement Today
Thread Tools Display Modes
Solo Roth 401k question
Old 07-17-2007, 01:53 AM   #1
Recycles dryer sheets
Join Date: Jul 2007
Posts: 346
Solo Roth 401k question

I just found out about the solo 401k and there is something I don't understand.

If you are self employed but you have many sources of income what are your contribution limits for your solo 401k?

Here is what I mean. Lets say your main business makes 20k a year and you make 5k a year in interest and 10k a year trading stocks and another 5k a year doing odd jobs for people giving you 40k a year total income.

Can you only contribute to your 401k from just your business that makes 20k a year or can you include your other income sources as well and count it as 40k?

The business that makes 20k a year is really your only real business the rest of your income is still self employed income but it isn't an actual business.

I haven't been able to find the answer to this anywhere but I figured it would be just your business amount of 20k that would count. If so is there another way that you could set up a roth retirement account that you could use your full 40k income with?

I probably made a mess out of explaining this!


summer2007 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-17-2007, 05:56 AM   #2
Thinks s/he gets paid by the post
retire@40's Avatar
Join Date: Feb 2004
Posts: 2,670
Originally Posted by summer2007 View Post
I just found out about the solo 401k and there is something I don't understand...Can you only contribute to your 401k from just your business that makes 20k a year or can you include your other income sources as well...
Just your business income is used for the calculation.
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Old 07-17-2007, 09:49 AM   #3
Full time employment: Posting here.
perinova's Avatar
Join Date: Apr 2006
Posts: 529
I think if your are a schedule C business you can put as much as 20% of the income subject to the self employment tax in your 401k. to a maximum of about $45k this year.
perinova is offline   Reply With Quote
Old 07-18-2007, 12:12 PM   #4
Full time employment: Posting here.
Join Date: Sep 2006
Posts: 608
Actually, looking at Schwab's "individual 401k", it looks to me
like you can contribute the first $15,000 of Schedule C income

Now, this is only a regular 401K, not Roth 401K, but as someone
pointed out in another thread, you can use the headroom in AGI
(generated by deferring to this individual 401K) to do a Roth
conversion. So, if I'm reading this correctly, you can effectively
put all the deferred money into your Roth ! Seems almost too
good to be true ...
JohnEyles is offline   Reply With Quote


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Hello, and a 401k question... ProspectiveBum Hi, I am... 7 05-31-2007 10:28 AM
New Poster, Long time reader. have a 401k, in between jobs, question!!! Jbird Hi, I am... 8 02-03-2007 10:17 AM
401k Plan and Spousal IRA Question ShokWaveRider FIRE and Money 6 10-28-2005 08:10 AM
Paying off Debt vs. 401(k) Contributions BigMoneyJim FIRE and Money 4 02-10-2003 10:06 AM

» Quick Links

All times are GMT -6. The time now is 12:41 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.