Q: I was wondering, are there any examples where a C-corp was run as a home business or renting a virtual office? Or is this strictly prohibited?
A: There is no prohibition against the C corporations operating as a home business. The concern from a ROBS 401k perspective is that the C corporation should not pay you rent to use the space in your home.
I think I already asked you this, but I can't find an email about it. My Non-prototype Fidelity account is setup and I will be transferring money to this account. Here is what I can't remember.
-I already maxed out my Roth IRA contribution for 2014 ($5,500). If I remember correctly, I can also contribute another Roth contribution of $5,500 on this account. Is this correct?
ANSWER: Qualifying to make a ROTH IRA contribution of $5,500 is affected by how much your net income is. See following link:
On the other hand, the ROTH Solo 401k is not affected by this rule and thus the net income can be any amount. However, in order to make a Roth Solo 401k contribution, you must have self-employment income. The maximum Roth Solo 401k contribution for 2014 is $17,500 which is basically the employee contribution portion. Therefore, you must run a calculation, using the net income figure on line 31 of schedule C since your business type is a solo proprietorship.
In sum, provided you net income is not over a certain limit (see IRS link above), you can max out the Roth IRA contribution of $5,500, and also max out the Roth Solo 401k contribution of $17,500 as long as you have enough net income from your self-employed business.
Are you familiar with Fidelity's process for the Roth contribution? (To make sure it's applied to the Roth).
ANSWER: Yes. You will need to setup an additional brokerage account under the solo 401k to hold the Roth solo 401k funds as the regulations require separate tracking of Roth solo 401k and Pre-tax solo 401k funds. We will prepare and email the Roth solo 401k Fidelity brokerage account forms later today.
I see the profit sharing amount information on the calculator on your website (very useful by the way), but noticed Roth contribution information was not listed there. Thanks and God Bless!
ANSWER: Good question. The employee-401k figure is the Roth Solo 401k contribution amount. It is important to note that the employer contribution (profit sharing) can only be applied as a pre-tax solo 401k contribution not a Roth Solo 401k contribution; whereas, the employee contribution portion can be applied as a Roth Solo 401k or Pre-tax solo 401k contribution.
Jesus in San Antonio, TX
Mark Nolan has been active in the 401k and IRA industry for over 18 years. Working as a 401k administrator at Nationwide Insurance Company; then working as a Compliance Officer and Manager at self-directed IRA/401k custodian companies such as Trust Administration Services Corporation (now owned by Equity Trust Company), to IRA Services Trust company. Mark is currently the Compliance Manager at MySolo401k.Net.