I have a W2 job, but I do a small 1099 consulting gig that I do for $200/month. I’d like to put the entire $200 into Self-Directed Roth Solo 401k. Can I contribute $200 from my checking account to Solo 401k account on an automatically every month?
ANSWER:
The Roth Solo 401k designated account is made up of only Employee contributions so the overall limit you can contribute to the Roth Solo 401k is $19,500 in 2020 or $26,000 if you are over 50 yrs. old. However, please note that if you max out your W2 employer 401k plan then you could not make a Roth Solo 401k contribution because you would have already made an employee contribution to a 401k plan. Furthermore, since you have 1099 income your contributions are based on what you report on line 31 of your Schedule C. You would need to take that number and then deduct 1/2 of self-employment income tax to get your total self-employment compensation prior to making a contribution to the Solo 401k plan. Please see the following helpful links: