Maxing Out My Solo 401k in Addtion to Fortune 500 Company 401k Plan

This is John. I had the pleasure of talking with you this afternoon. 

You brought up other interesting strategies for me to contribute more earned income from my personal business (in addition to me maxing out my Fortune 500 company 401k @ around ~$59,000).

Yes the 401(k) regulations allow for contributions to multiple 401(k) plans. This is especially advantageous for those who have a full-time job and participate in that employer's 401(k), and those who also have a self-employed business and participate in that self-employed business solo 401(k).

A solo 401(k) is made up of employee and employer contributions.

The employee contribution which is 18,000+6000 for those age 50 or older is aggregated among all 401(k) plans.

However the profit-sharing contribution (employer contribution) is not subject to this aggregation rule.

As a result, if you have a solo 401(k) plan for your self-employed business and have already contributed the 18,000+6000 to the full-time employer 401k plan, you can still contribute the profit-sharing portion to the solo 401(k) plan even though you have already contributed the maximum of $59,000 to the daytime job 401k plan.

For example, let's assume that your self-employed business is an S corporation and that you want to make a contribution to the solo 401(k). Let's further assume that you have $100,000 of W-2 income from your S corporation.

Therefore, you would be able to contribute  a profit-sharing contribution (employer) amount of $25,000 into the solo 401(k) which was calculated by multiplying 100,000×25%. The end result, means that you would have contributed a total of $84,000 (59,000+25,000) to both your daytime job employer 401(k) and your self-employed business solo 401(k) plan.

For more information regarding making contributions to multiple 401k plans, VISIT HERE.