Solo 401k and S election

[Suzanna Lam]

I just recently open a solo 401k for my business (single member LLC with me and my hubby being the members) with me being the trustee. So I am in control of my checkbook. So far so good.

My understanding is that I can contribute up to $49K of my earned income into this solo 401k. Fine I can do that.

Now, if I buy and flip, my earned income is subject to self-employment tax at 15% because of the flow through nature of the LLC. However, if I do my buy and flip in an S corp, that same income isn't taxed at 15% but 7.5%, give or take because the S-corp will pay the other 7.5%. Question is: should I elect to treat my single member LLC as an S corporation for tax purposes so that I personally wouldn't have to pay the 7.5% self-employment tax? The issue I'm running into is that if I elect to be treated as an S corp. my ability to contribute up the the max allowed for solo 401k is diminished because now I am an employee of an S corporation not a sole proprietor.

Does any one have any input? Thanks.