When it comes to determining the maximum amount that, as self-employed, you can contribute to Solo 401k or Individual 401k, the process is for the most part straight forward. The main thing to keep in-mind is that the calculation is somewhat different depending on whether you are a sole proprietor, corporation or partnership entity type.
Sole Proprietor and Partnerships Sole proprietors, to calculate the maximum contribution, use your net profits from IRS Form 1040, Schedule C, and subtract 1/2 of self-employment (SE) using Schedule SE. Alternatively, once you determine net profit figure on Schedule C, plug this numer into our online Solo 401k calculator which will automatically reduce the 1/2 of self-employment tax and then provide your maxium Solo 401k contribution. Here's the link to our online solo 401k calculator:
http://www.mysolo401k.net/solo401kcontributioncalculator.html
For partnerships, use each partner's net profits to calculate the maximum Solo 401k contribution. Each partner's profits are reported on IRS Form 1065, Schedule K-1, and each partner's SE taxes as determined on IRS Form 1040, Schedule SE. The annual Solo 401k contribution is made up of two figures: an employer profit sharing contribution and an employee salary deferral contribution. In our next blog we will give examples of estimated calculation for a sole proprietor and a partnership.
Our online solo 401k contribuiton calculator can also be utilized for calculating contribution for partnerships. See link above.
No comments:
Post a Comment