Comments on: Solo 401k For Part-Time Self-Employment http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html like a friend telling you about money ... Wed, 17 Mar 2010 20:48:24 -0500 http://wordpress.org/?v=2.8 hourly 1 By: catlady http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-3601 catlady Sun, 14 Mar 2010 23:00:26 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-3601 Never mind. I think I get it now. The max. to the solo 401K is only from self-employment income. I can use an IRA (traditional) to save on taxes/save for retirement from my part-time job (for which I am not 401K eligible). Never mind. I think I get it now. The max. to the solo 401K is only from self-employment income. I can use an IRA (traditional) to save on taxes/save for retirement from my part-time job (for which I am not 401K eligible).

]]> By: catlady http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-3600 catlady Sun, 14 Mar 2010 21:28:25 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-3600 Possibly dumb question, but I cannot find an answer anywhere. What if you work part-time and are not eligible for the 401K at work at all, but you also have freelance work on the side. Now, let's say the freelance work does not make much more than a pittance (~1,100 gross per year, on average, with some years better). If you open a Solo 401K, could you use some of your wages from the part-time job to fund it? Or can you only use your earnings (gross or net) from the freelance work to fund it? Again, not eligible for 401K at "day job." But would like to use some "day job" wages to help fund the Solo 401K for the freelance work. Possible? Possibly dumb question, but I cannot find an answer anywhere.

What if you work part-time and are not eligible for the 401K at work at all, but you also have freelance work on the side.

Now, let’s say the freelance work does not make much more than a pittance (~1,100 gross per year, on average, with some years better).

If you open a Solo 401K, could you use some of your wages from the part-time job to fund it? Or can you only use your earnings (gross or net) from the freelance work to fund it?

Again, not eligible for 401K at “day job.” But would like to use some “day job” wages to help fund the Solo 401K for the freelance work. Possible?

]]> By: MTXB http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-3499 MTXB Mon, 22 Feb 2010 17:18:46 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-3499 Please excuse my ignorance here but you'd need to set up Solo 401k ONLY if you have non-deductible IRA and traditional IRA (401k rollover) together. You don't need to set up solo 401k if you ONLY have traditional IRA (401k rollover from previous job)? Please excuse my ignorance here but you’d need to set up Solo 401k ONLY if you have non-deductible IRA and traditional IRA (401k rollover) together. You don’t need to set up solo 401k if you ONLY have traditional IRA (401k rollover from previous job)?

]]> By: Academic http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-3431 Academic Thu, 11 Feb 2010 01:58:43 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-3431 Fantastic post. As an academic, I contribute to both my 403(b) and 457. I also have some self-employed income from part-time consultancy, so I recently opened a solo 401(k). If I'm not mistaken, the 403(b) and 401(k) are pooled together for the purpose of the deferral limit, and the 457 is separate. So if I got the numbers right, one can potentially defer $16,500 (for the 457) plus $49,000 (401k + 403b) for a total of $65,500. And the 50+ crowd can potentially defer an additional $5,500 on their 457 for a grand total of a $71,000. WOW! Fantastic post. As an academic, I contribute to both my 403(b) and 457. I also have some self-employed income from part-time consultancy, so I recently opened a solo 401(k).

If I’m not mistaken, the 403(b) and 401(k) are pooled together for the purpose of the deferral limit, and the 457 is separate.

So if I got the numbers right, one can potentially defer $16,500 (for the 457) plus $49,000 (401k + 403b) for a total of $65,500.

And the 50+ crowd can potentially defer an additional $5,500 on their 457 for a grand total of a $71,000. WOW!

]]> By: DAVID NEWMAN http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-3362 DAVID NEWMAN Mon, 01 Feb 2010 19:50:22 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-3362 hI john czerwonka I JUST USED MY PRINT OPTION IN MY BROWER hI john czerwonka

I JUST USED MY PRINT OPTION IN MY BROWER

]]> By: john czerwonka http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-3346 john czerwonka Sat, 30 Jan 2010 22:08:57 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-3346 OK. I'm not a techie guy, so I apologize for what might seem like a "dumb" question. I've found the spreadsheet to calculate a solo 401-K contribution and it's very helpful. However, I can't figure out how to save it or print it on my computer. If I use the file save, and try to open it's unreadable. And, if I simply use file/print it only prints half the page. I subscribed to Zoho (whatever that is) hoping it would allow me to save and print the spreadsheet, but I have no idea how to do that. Can any one help? OK. I’m not a techie guy, so I apologize for what might seem like a “dumb” question. I’ve found the spreadsheet to calculate a solo 401-K contribution and it’s very helpful. However, I can’t figure out how to save it or print it on my computer. If I use the file save, and try to open it’s unreadable. And, if I simply use file/print it only prints half the page. I subscribed to Zoho (whatever that is) hoping it would allow me to save and print the spreadsheet, but I have no idea how to do that. Can any one help?

]]> By: Brad http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-2450 Brad Thu, 16 Jul 2009 23:39:25 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-2450 Right you are. I assumed the limit on a solo (individual) 401k was the same $16.5k as for a corporate 401k. But they're different. A "corporate" is really a W-2 401k, then you can also contribute 20% or 25% on top of that. So as you say, a solo or individual 401k allows even higher contributions if you have both a W-2 and a proprietorship/Sched C business (if you want to do the paperwork--though SEP paperwork isn't that simple either, but in both cases a trustee like Schwab or whoever does most of the work for you). Thanks for the info! Useful link: http://www.sepira.com/sep_ira/sep-or-401k.htm I'll spell it out in case your security strips it: sepira.com/sep_ira/sep-or-401k.htm Right you are. I assumed the limit on a solo (individual) 401k was the same $16.5k as for a corporate 401k. But they’re different. A “corporate” is really a W-2 401k, then you can also contribute 20% or 25% on top of that. So as you say, a solo or individual 401k allows even higher contributions if you have both a W-2 and a proprietorship/Sched C business (if you want to do the paperwork–though SEP paperwork isn’t that simple either, but in both cases a trustee like Schwab or whoever does most of the work for you).

Thanks for the info!

Useful link: http://www.sepira.com/sep_ira/sep-or-401k.htm

I’ll spell it out in case your security strips it: sepira.com/sep_ira/sep-or-401k.htm

]]> By: TFB http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-2447 TFB Thu, 16 Jul 2009 23:04:51 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-2447 Brad - No you cannot put away even more in a SEP-IRA than a solo 401k. At most you can contribute the *same* amount in a SEP-IRA, but not more. The limit on the employer profit sharing side is exactly the same between SEP-IRA and solo 401k. There is no salary deferral in a SEP-IRA, while there is salary deferral on top of employer profit sharing in a solo 401k. That's the difference. If you max out 401k at work, SEP-IRA and solo 401k give you the same maximum. If your work 401k isn't that great, you can get the match and do the rest in your own solo 401k. You don't have that option with a SEP-IRA. In addition, you cannot use a SEP-IRA as a safe haven for your other IRA money for the purpose of converting to Roth IRA in 2010 and thereafter. Brad – No you cannot put away even more in a SEP-IRA than a solo 401k. At most you can contribute the *same* amount in a SEP-IRA, but not more.

The limit on the employer profit sharing side is exactly the same between SEP-IRA and solo 401k. There is no salary deferral in a SEP-IRA, while there is salary deferral on top of employer profit sharing in a solo 401k. That’s the difference.

If you max out 401k at work, SEP-IRA and solo 401k give you the same maximum. If your work 401k isn’t that great, you can get the match and do the rest in your own solo 401k. You don’t have that option with a SEP-IRA. In addition, you cannot use a SEP-IRA as a safe haven for your other IRA money for the purpose of converting to Roth IRA in 2010 and thereafter.

]]> By: Brad http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-2446 Brad Thu, 16 Jul 2009 22:17:33 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-2446 Why do a solo 401k, when you could just do a SEP-IRA instead. You can put away even more in a SEP-IRA than a 401k, without all the administration headaches, etc. You can put away up about $49,000 (25% of $196,000)... Something like that. I suppose if your income is such that you want to put away $16,500 (in 2009) into a 401k, but you make less than 4x or 5x that (25% or 20%), then possibly the headaches of a 401k would be worthwhile. I don't think there is any limitation of SEP-IRAs if you are also covered at work (but maybe I'm wrong about that, in which case, you're right--and never mind! ;-) Cheers, Brad Why do a solo 401k, when you could just do a SEP-IRA instead. You can put away even more in a SEP-IRA than a 401k, without all the administration headaches, etc.

You can put away up about $49,000 (25% of $196,000)… Something like that.

I suppose if your income is such that you want to put away $16,500 (in 2009) into a 401k, but you make less than 4x or 5x that (25% or 20%), then possibly the headaches of a 401k would be worthwhile.

I don’t think there is any limitation of SEP-IRAs if you are also covered at work (but maybe I’m wrong about that, in which case, you’re right–and never mind! ;-)

Cheers,
Brad

]]> By: Susan http://thefinancebuff.com/2008/11/solo-401k-for-part-time-self-employment.html/comment-page-1#comment-1797 Susan Mon, 30 Mar 2009 20:52:44 +0000 http://thefinancebuff.com/2008/10/solo-401k-for-part-time-self-employment.html#comment-1797 Thank you so much. I have been laboring over the Fidelity worksheet but wasn't entirely sure it was correct, since I also fall into the part-time category you outline. Your worksheet is a whole lot easier...and the numbers came out the same -- even better! Thanks! Thank you so much. I have been laboring over the Fidelity worksheet but wasn’t entirely sure it was correct, since I also fall into the part-time category you outline. Your worksheet is a whole lot easier…and the numbers came out the same — even better! Thanks!

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