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I am contributing to the 401(k) at my part time job, but want to know if I can also open a Solo 401(k) to delay taxes on income from my work as an independent contractor.

rjdevereux
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If you have self-employment income you can open a Solo 401k. Your question is unclear as to what your employment status is. If you are self-employed as an independent contractor, you can open a Solo 401k. You can still do this even if you also earn non-self-employment income (i.e., you are an employee and receive a W-2). However, the limits for contributions to a Solo 401k are based on your self-mployment income, not your total income, so if you have only a small amount of self-employment income, you won't be able to contribute much to the Solo 401k. You may be able to reduce your taxes somewhat, but it's not like you can earn $1000 of self-employment income, open a Solo 401k, and dump $5000 into it; the limits don't work that way.

BrenBarn
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A Solo 401k plan requires self-employment income; you cannot put wages into it.

Dilip Sarwate
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I'm in a similar situation as I have a consulting business in addition to my regular IT job.

I called the company who has my IRA to ask about setting up the Individual 401k and also mentioned that I contribute to my employer's 401k plan. The rep was glad I brought this up because he said the IRS has a limit on how much you can contribute to BOTH plans. For me it would be $24K max (myAge >= 50; If you are younger than 50, then the limit might be lower). He said the IRS penalties can be steep if you exceed the limit.

I don't know if this is an issue for you, but it's something you need to consider. Be sure to ask your brokerage firm before you start the process.

JaneQDoe
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