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Posted by NKaufman on April 17, 2006, 10:54 pm
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Steve Pope wrote:
>> 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.
the question that remains is that for sole props - Line 28
contains both the employee deferral as well as the company
contribution. So in the above scenario, my W-2 shows 10K for
my plan at work, but line 28 now shows $14K (4K my deferral
and 10K employer contribution). so you mean to tell me that
IRS does not look into the breakdown of this line?
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