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Imagine this scenario:

Alice is self-employed for the first half of the year. She opens a solo 401(k), contributes $20k in employer contributions, and saves $10k in cash from her earnings. She then changes jobs to a standard W2 job.

Can she make additional contributions to the solo 401(k) (on either the employee or employer side) after ending self-employment? If she can, is there a limit besides the total 401(k) contribution limit ($70k combined employer + employee)? (For instance, the $10k that she had saved up at the time she changed jobs.)

Assume that her income was sufficiently high when self-employed that income limits to employer contributions are not an issue.

asgallant
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1 Answers1

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My understanding is that as long as you had self-employment income in that year, then yes, you can. Nothing is stopping you from having a 401k at a regular W2 employer and running a business on the side, and then maxing out a solo 401k on top of the employer-based 401k. The only thing that matters is the formula for calculating how much you can contribute to a solo 401 (k) based on that year's self-employment income.

AlexCasWealth
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