Assuming a net YTD of $75,000
QUESTION 1: My self-employed business entity type is a sole proprietorship. Am I correct that because I am 52, I can make a deferral of $17,500+5500?
ANSWER: Correct that based on net self-employment income of $75,000 for tax year 2013, you will be able to maximize the solo 401k, 2013 annual contribution. Therefore, you will be able to make an employee elective deferral of $17,500 plus a catch-up contribution amount of $5,500 because you are aged 52, resulting in $23,000 of employee contributions. Please click on solo 401k contribution calculator to run a quick calculation.
QUESTION 2: And the part that varies is the Employer Contribution?
ANSWER: Based on $75,000 of net self-employment income in 2013, the profit sharing (employer) contribution amount will be $13,940.28. See the solo 401k contribution calculator to confirm.
QUESTION 3: How many times can I make a contribution in this year and up to 4/15/2014 or the extension date?
ANSWER: You can make annual solo 401k contributions-- up to maximum limit of $56,500 since you are over age 50--as many times up until you file your tax return, including tax filing extensions.
QUESTION 4: there a limit on number of contributions pert tax year?
ANSWER: No the IRS rules do not place a limit on the number of solo 401k contributions, just on the maximum annual solo 401k contribution amount as discussed above.
QUESTION 5: Does the Employer Contribution and deferral have to be separate deposits?
ANSWER: No as long as the employee contributions are not applied as Roth solo 401k contributions. If applied as Roth Solo 401k contributions, the employee contributions would need to be made to the Roth designated bank or brokerage account.
QUESTION 6: Can one be done without the other?
ANSWER: Yes the key is not to exceed the annual solo 401k contribution limits.
QUESTION 7: Can the Employer Contribution be done all at once at the end of the year or up to 4/15/2014 or the extension date?
ANSWER: The contribution can be made anytime during the year up until the tax return due date, including any extensions (IRC Sec. 404(a)(6), to be deductible for a given year.
David in Arizona