How to Make Solo 401k Contributions (Webinar Replay)
Published at : 25 Dec 2020
Presented by Rachel of Nabers Group and www.Solo401k.com, this webinar dives into Solo 401k contributions.
Hello everybody and welcome to this evening's webinar. It is so awesome to have you here with us. Um, before we get started, I just want to do a quick technical check. Somewhere at the bottom of the screen here you should see something that says like Q and. A. I believe it says it right below here. Do me a favor if you can hear me and you can see me just type yes into the Q and a so that I know that everybody is on. Okay. Yes, yes. Looks good. Sounds good. Awesome. Perfect. Great. All right, so it is so exciting to have everyone with us this evening. Um, I've got a presentation for you. We're going to jump into that in about 30 seconds. We've got a lot of people coming on, so I just wanna make sure we're giving everyone a chance to join us.
Um, grab a pen and paper, sit back, relax. We're going to cover lots of juicy content about Consolo, 401k contributions. And in just a moment here, we'll get started. I'm going to share my screen so that you can see the presentation that I've prepared for you and we will dig right into contributions. So you should be able to see my screen now and we'll go ahead and get started. So this evening we are going to be discussing contributions to the solo 401k plan. Of course, just a quick disclaimer, especially when we're talking about contributions. Um, this is not tax or legal advice. So I, you know, if you have questions about tax advice, calculating those contributions, doing your final numbers, you do want to make sure that you are covering those with your CPA. And give me just one moment here. Okay. I thought our screen was flickering for a moment back and forth to my camera, but I think it's probably okay now.
So we'll go ahead and proceed. All right. I think we're all good. So we just needed to get warmed up. So yeah, welcome everybody. And you can use contributions to your solo 401k plan to save more money, reduce your taxes, and grow your retirement nest egg. Now before we really dive into things, contributions come from net profit in your business, you have to have profit in your business to make contributions. So if your business is just getting up and running or if you haven't made any profit just yet, then this is going to be a great opportunity for you to learn more about the solo 401k and how these contributions work. And also just a reminder, use the tools we have contribution calculators that are available for you so you can determine how much you can put in your solo 401k plan. Just a little tip, remember to view the report on the contribution calculator page to see how to determine which portion of the contribution calculations are coming from the employee and which are the employer.
Always check with your CPA to make sure your contribution calculations are accurate and you can find that contribution calculator tool at solo 401k.com/calculator now let's dig in. So if your small business has net earnings and profit, you can contribute some of that money into the solo 401k contributions can be pre tax. That is tax deductible or Roth, which is after tax. The total contribution amount you can make to the solo 401k plan is $56,000 or $62,000 if you are age 50 or older and amounts are slightly higher for 2020 so because most of us are still wrapping up our 2019 tax year, maybe we're still making contributions to the solo 401k for 2019 the examples and assumptions that we're going to deal with this evening are going to use 2019 numbers, but we will tell you about those slight cost of living. The IRS calls them contribution increases for 2020 there are two types of contributions to the solo 401k plan, employees salary deferral contributions and employer profit sharing contributions. Technically there are other subgroups of contributions including voluntary after tax contributions, which is a type of employee salary deferral contribution. Today's webinar is going to be an overview of how contributions work and how to make contributions to your solo far Oh one K plan. We'll be getting further into more advanced strategies like in plan Roth conversions and the mega backdoor Roth strategy. First we'll talk about employee contributions. Employee contributions must come from your business earnings and you can put in a maximum of $19,000 as the employee contribution. That's 19,500 for 2020 but again for the point of this evening's webinar, we're really going to focus on those 2019 numbers since most of us are probably still in our 2019 tax year as far as reporting is concerned, these employee contributions, if you are age 50 or older, you get to stash an extra $6,000 in there so you can really put in $25,000 if you're age 50 or older and 19,000 if you are under age 50 as the employee contribution for 2020 you can put in 19,500 as the employee contribution and then 26,000 if you are age 50 or older.