![]() ![]() ![]() That would give Liz a total of $29,500 of additions to her plan for 2021. For 2021, she plans on making the full $19,500 deferral to her Roth 401(k) and expects to receive between matching and profit-sharing contributions another $10,000 in employer contributions. ![]() Liz works for an employer that sponsors a full-time employer 401(k) plan that allows her to make after-tax contributions. If a solo 401k provider’s plan document allows for after-tax contributions, then from a tax code perspective the self-employed individuals can make voluntary after-tax solo 401k contributions up to their overall limit for the year as described above. This is an IRS rule not a solo 401k plan provider rule. Instead, they can be applied as Roth solo 401k contributions for those aged 50 in older. Important Compliance Note: Catchup employee contributions cannot be applied as voluntary after-tax contributions. The overall limit looks at the total annual additions to all of a participant’s accounts in plans maintained by one employer, and includes not just their salary deferrals (employee contributions), but also employer profit sharing contributions. ![]() For 2022, the overall limit increased by three thousand dollars to $61,000.However, there is a lesser known rule called the “overall 415 limit.” The overall 415 limit for 401(k) plans including solo 401k plans for 2021 is $58,000, or 100% of compensation, whichever is less.In 2021, the combined salary deferral limit for pre-tax and Roth salary deferrals to Solo 401(k) plans is $19,500. One benefit of after-tax contributions is that the salary deferral limits that apply to other participant contributions do not necessarily apply to after-tax contributions. While not all solo 401k plans allow for after-tax contributions, My Solo 401k Financial offers a solo 401k plan document that allows for aft-tax contributions. ![]()
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