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Posted by Steve Pope on April 14, 2006, 4:23 am
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> I have a full time job (with Simple-IRA) and a part-time
> consulting business (sole prop with no employees). I maxed
> out Simple-IRA. I opened a solo 401k last year and
> contributed to it. I want to know how to handle my
> contribution and profit -sharing contribution. It seems that
> both these amounts would go on line 28 of 1040 rather than
> the profit-share going on Sch C. In such a case, how does
> the IRS calculate whether or not I have exceeded $14K
> contribution in defined plans since this 14K does not
> include profit-share. i.e 1040 form would show that I put in
> $10K in Simple-IRA, put in 4K for solo 401K and put in
> another 10K as profit-share.
The IRS doesn't calculate this, you do. (But they may
also caculate it just to check up on your arithmetic.)
Your full-time job will have given you a W2 which should
show the amount contributed to that employer's 401K plan,
probably on line 12b code D. You need to subtract this from
the overall $14K elective deferral limit when making your
Solo-401K contribution, (which as you note above has both
the elective deferral and profit- sharing components, and
could be as large as $42K) and the total amount you
contribute to your solo 401K is the amount that goes on line
28.
403(b)'s and some other plans also count towards the same
14K elective defferal limit.
Nothing on Schedule C relates to your retirement plan(s),
unless you have employees.
Hope this helps.
Steve
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