SEP vs solo 401K...

[frenchieinme]

A taxpayer with a SEP who has an LLC with no employees reports his net business income on his sch C and takes his SEP contribution on line 28 of 1040 form; that I understand and have been doing for years.

Does anyone have any knowledge about what is called a solo 401K and how that gets reported? Does one report it on form 1040 or on Sch C or where.

Moreover does a solo 401k allow you to take the full $18000 for 2917/$18500 for 2018 or is it a % like SEP up to $18000?

I am starting to research this topic and thought someone on TUG might be able to shed some light on this matter.

Thanks

 

[SmithOp]

It follows the same rules as 401k except it is not subject to discrimination testing. Report it on line 28 also.

https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people

You should review IRS Pub 560 also.


Sent from my iPad using Tapatalk Pro

 

[Conan]

It follows the same rules as 401k except it is not subject to discrimination testing. Report it on line 28 also.

Agreed.

Also, if plan assets at year end exceed $250,000 there's a required annual filing of Form 5500-EZ no later than the following July 15.
https://www.irs.gov/instructions/i5500ez#idm139686677665552

Edited to add: "... not subject to discrimination testing" because being a solo plan, there can't be any full time employees in your business apart from you and your spouse.

 

[vacationtime1]

Moreover does a solo 401k allow you to take the full $18000 for 2017/$18500 for 2018 or is it a % like SEP up to $18000?

The SEP limit is a lot higher -- about $53K. At least that is what TurboTax tells me.

 

[Conan]

The SEP limit is a lot higher -- about $53K. At least that is what TurboTax tells me.

I thought the SEP-IRA limit in 2017 was 54,000 (if you have sufficient self-employment income).

But a solo 401k is different from a SEP-IRA, and a solo 401k contribution for 2017 can be as much as $60,000 (if you're old enough and have about $200,000 or more of self-employment income).
Here's the calculator for a solo 401k
https://personal.vanguard.com/us/SbsCalculatorController

 

[vacationtime1]

I thought the SEP-IRA limit in 2017 was 54,000 (if you have sufficient self-employment income).

You're probably correct; the $53K number is my recollection from last year.

After all, it's only mid-day April 15; I haven't started my taxes yet.

 

[rosebud5]

This stuff gives me a headache.. that's why I use Turbotax. Looks to me like the 401K solo is similar to filing as an LLC, sole proprietorship. You have the profit sharing piece (SEP) and the salary deferral (401K). Max this year I believe is $55K. I dont think that includes the catch-up for over 50. BTW: This calculation is a B-I-itchie, so use a program to do the calculating.

When I look at my 1040, the total dollar figure is listed on line 28, under adjusted gross income.