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Solo 401k Contribution Limits

In 2010 and 2011 the total contribution limit for a Solo 401k is $49,000 or $54,500 if age 50 or older. The annual Solo 401k contribution consists of 2 parts a salary deferral contribution and a profit sharing contribution. The total allowable contribution adds these 2 parts together to get to the maximum Solo 401k contribution limit.

Solo 401k contributions are flexible. Both the salary deferral and the profit sharing contributions are discretionary and can be changed at anytime based on business profitability.

The contribution limits can be doubled for husband and wife businesses. Businesses with a spouse on the payroll can also contribute to the Solo 401k. There would be one Solo 401k for the business with two participants.

Provided a business owner and spouse have sufficient income from the business, both may be able to contribute $49,000 each or $54,500 each if both are age 50+ in 2010 and 2011.

Solo 401k Contribution Calculations

NOTE: The calculation of how much can be contributed to the Solo 401k is dependent on whether your business is taxed as a corporation and you receive a W-2 or if you are taxed as a sole proprietorship. Examples of both are shown below.

Sole proprietorship, partnership or a LLC taxed as a sole proprietorship.
- View examples of solo 401k contribution limits.

S or C corporation or a LLC taxed as a corporation.
- View examples of solo 401k contribution limits.

 

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Disclosures:

*The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

*Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.