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I have a freelancing business (just me, sole proprietor) that I run in parallel to my full-time day job. I need to make extra money on the side because I'm behind with retirement savings.

I set up a self-employed 401k US retirement account. I'm now wondering about the maximum contribution I can make to the 401k.

Let's assume I'm not doing any 401k contributions from my full-time job and after all expenses, but before taxes, I made $8k with freelancing in 2018. Can I put the entire $8k into the 401k for retirement?

Dr. O
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  • This information is easily searchable and discoverable. - https://www.irs.gov/retirement-plans/one-participant-401k-plans – joeqwerty Jan 30 '19 at 02:03
  • My problem is that I don't fully understand the IRS information. For example, they write: "Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit" --- so if my business made $8k and I want to put money into my 401k, do I have to give myself $4k income and can then put $4k into the 401k? Or can I give myself $0k income and put the entire $8k into the 401k? – Dr. O Feb 02 '19 at 10:50
  • Any information you get here shouldn't be assumed to be correct or authoritative. My suggestion would be for you to reach out to a tax professional. – joeqwerty Feb 02 '19 at 15:30
  • Well, the reason I come here with questions is that talking to a tax professional is very expensive. That's the whole point of stack exchange -- provide crowd-sourced/community-sourced advice, isn't it? – Dr. O Feb 02 '19 at 20:53
  • Well, the reason I come here with questions is that talking to a tax professional is very expensive. That's the whole point of stack exchange -- provide crowd-sourced/community-sourced advice, isn't it? - Not for what amounts to legal and/or tax advice. Unless someone here is an actual tax professional or legal attorney then I wouldn't take any tax information gleaned here as authoritative. The IRS isn't going to accept "But on StackExchange they told me it was OK" as an acceptable reason for your income tax errors. – joeqwerty Feb 02 '19 at 21:22

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