Calculate your maximum 2024 Solo 401k contributions
W-2 wages for Corps or Net Profit for Sole Props
S-Corp / C-Corp (W-2 Employee)
Sole Proprietor / Single-Member LLC
Contribution Breakdown
Employee Elective Deferral:$0
Employer Profit Sharing:$0
Total Maximum Contribution:$0
Understanding the Individual 401k
An Individual 401k, also known as a Solo 401k, is a powerful retirement savings tool designed specifically for self-employed individuals and business owners with no employees other than a spouse. It offers much higher contribution limits than traditional IRAs or SEP IRAs.
How Contributions Work
You can contribute to your Solo 401k in two capacities:
Employee Contribution: You can contribute 100% of your earned income up to the annual limit ($23,000 for 2024). If you are age 50 or older, you can add a catch-up contribution of $7,500.
Employer Contribution: Your business can contribute an additional amount. For S-Corps, this is 25% of your W-2 salary. For Sole Proprietors, it is approximately 20% of your net self-employment income after deducting half of your self-employment tax.
2024 Example Calculation
If you are 40 years old, structured as an S-Corp, and pay yourself a W-2 salary of $100,000:
Employee portion: $23,000 (Maximum limit)
Employer portion: $25,000 (25% of $100,000)
Total: $48,000 towards your retirement.
function calculateSolo401k() {
var income = parseFloat(document.getElementById('annualIncome').value);
var age = parseInt(document.getElementById('userAge').value);
var structure = document.getElementById('bizStructure').value;
if (isNaN(income) || income <= 0) {
alert("Please enter a valid annual income.");
return;
}
if (isNaN(age) || age = 50) {
maxEmployee += catchUpLimit;
}
var actualEmployee = Math.min(income, maxEmployee);
var actualEmployer = 0;
if (structure === 'corp') {
// For S-Corp/C-Corp, employer part is 25% of W-2 salary
actualEmployer = income * 0.25;
} else {
// For Sole Prop, calculation is Net Income – 1/2 SE Tax, then 20%
// Simplified common calculation for tools: Net Income * 0.1858 or roughly 20% of adjusted
// We use the 20% of net income adjusted for the SE tax deduction
var seTaxRate = 0.153;
var seTaxDeduction = income * 0.9235 * seTaxRate * 0.5;
var adjustedIncome = income – seTaxDeduction;
actualEmployer = adjustedIncome * 0.20;
}
// Overall plan limit per person (excluding catch-up for the employer part calc)
var totalMaxAllowed = (age >= 50) ? (totalLimitBase + catchUpLimit) : totalLimitBase;
// The sum of employer + employee (excluding catch-up in the 69k check usually,
// but the law allows catch up on top of the 69k)
var totalProposed = actualEmployee + actualEmployer;
if (totalProposed > totalMaxAllowed) {
// If we exceed the total limit, we must reduce the employer portion first
actualEmployer = totalMaxAllowed – actualEmployee;
if (actualEmployer < 0) {
actualEmployee = totalMaxAllowed;
actualEmployer = 0;
}
}
document.getElementById('employeePart').innerText = "$" + actualEmployee.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('employerPart').innerText = "$" + actualEmployer.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalContribution').innerText = "$" + (actualEmployee + actualEmployer).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resultsArea').style.display = 'block';
}