The ERISA question is addressed in the post. 🙂

Incredible article ! I will be 63 this year . This year I am also self employed and live in California. I didnt even realize that you can have a ‘solo’ 401K. Is 20% the maximum amount you can put into the account? About 50% of my earnings will be taxed and this solo account will be invaluable to me. And say at 67 I begin to draw off of this acct plan it it taxable?

I look forward to your response. So many decisions to make.

PS. I also havent made a fee schedule too the IRS . My concern here is if I go by my earnings and taxes and telling you it will be about 50% then I wont have that 20% to deposit. (Got to live the other half). How do I avoid lowering the scheduled fees to the IRS ?

Thank you again,

Barrie

Hey Andrew, glad you found the post useful! Regardless of whether your spouse is employed, this scenario might be possible if:

1. you don’t take any income as the employee (or you do but don’t care about paying taxes on it)
2. you have enough employer income to make the formula work (i.e. you can actually max out with 20% net SE earnings)

If 1 is not true, then it might be better to make the individual contribution in addition to the non-elective employer contribution. If 2 is not true, then you won’t be able to max out.

This article is amazing, thank you. I wish I had found it before struggling to figure out how to open an account myself. I can’t wait to pass it along to my colleagues. Now I need to contribute.

Is there a scenario where it would be more beneficial to make the $61,000 contribution 100% from the employer contribution assuming a spouse is NOT employed? What about of a spouse is employed? Does it matter? Or is it always advantageous to make the 20,500 employer contributions and profit match? Thank you!

You could put into solo 401k, but what’s the point? You’re already near the RMD age. Will you convert to Roth immediately? Also, 401k is good for deferring taxes, but you’ll already get the standard deduction of ~12.5k single, ~25k MFJ on the 35k which is tax-free anyway…why put so much in the 401k?

71 years old. College Professor. Can retire at any time. If retired, would still teach as an adjunct, as a 1099 person. Assume $35,000 income from adjunct teaching.

Based on this info, I would be able to put $27,000 (in 2022 limits) into a Solo 401k, correct?

I would use Vanguard. They have all my money now.

So glad to hear it helped!

Neil, ack just saw this. Re: #2, daughter can apply first and then add hubby later. Re: #1, I think spouses can be added to the Solo without needing to have a special corporate form. But it would be best to actually call TDA to verify how they handle spouses since brokerages may differ slightly; I’d also call TDA directly re: the EIN question (sorry don’t know off the top of my head).