Let's say you work at a W-2 job which offers a 401k, and you also have a self employed sole proprietor solo 401k.
As I understand it:
1. Your total limit for 2024 for elective (also know as employee, also known as salary deferral) contributions ACROSS BOTH PLANS COMBINED is $23,000. If I contribute $23k as an employee to my day job's W-2 plan, I can't make any employee contributions to my own solo 401k.
2. The limit for employer contributions (for example "profit sharing" or sole proprietor employer contributions) is $69,000, PER EMPLOYER'S 401k. So I could contribute, as employer, for example $69k to my own solo 401k if my income is high enough, and then my W-2 employer could still give me e.g. a matching contribution on my employee contributions, and no limits would have been broken. In fact my W-2 employer could also put $69,000 into my W-2 401k theoretically.
So how do limits on voluntary after tax contributions work?
- Are voluntary after tax contributions employee contributions? Or employer? Or can they be both?
- If they are employee contributions, then if I contribute $23k to my W-2 401k, how much can I contribute to my solo 401k in voluntary after tax contributions?
I find this article confusing: https://www.mysolo401k.net/voluntary-af ... -job-plan/ It seems to suggest that even if I contribute $23k to my W-2 job's 401k as an employee I can still contribute $69k to my own solo 401k as voluntary after tax contributions. How is that possible?
As I understand it:
1. Your total limit for 2024 for elective (also know as employee, also known as salary deferral) contributions ACROSS BOTH PLANS COMBINED is $23,000. If I contribute $23k as an employee to my day job's W-2 plan, I can't make any employee contributions to my own solo 401k.
2. The limit for employer contributions (for example "profit sharing" or sole proprietor employer contributions) is $69,000, PER EMPLOYER'S 401k. So I could contribute, as employer, for example $69k to my own solo 401k if my income is high enough, and then my W-2 employer could still give me e.g. a matching contribution on my employee contributions, and no limits would have been broken. In fact my W-2 employer could also put $69,000 into my W-2 401k theoretically.
So how do limits on voluntary after tax contributions work?
- Are voluntary after tax contributions employee contributions? Or employer? Or can they be both?
- If they are employee contributions, then if I contribute $23k to my W-2 401k, how much can I contribute to my solo 401k in voluntary after tax contributions?
I find this article confusing: https://www.mysolo401k.net/voluntary-af ... -job-plan/ It seems to suggest that even if I contribute $23k to my W-2 job's 401k as an employee I can still contribute $69k to my own solo 401k as voluntary after tax contributions. How is that possible?
Statistics: Posted by keyfort — Wed Jun 26, 2024 6:59 pm — Replies 2 — Views 181