Solo 401k Establishment Deadline
In order to make contributions to a Solo 401k for 2023, the IRS Solo 401k regulations require the Solo 401k to be opened by December 31, 2023.
What is the maximum Solo 401k contribution for 2023?
The maximum amount a self-employed individual can contribute to a solo 401(k) for 2023 is $66,000 if he or she is younger than age 50. Individuals 50 and older can add an extra $7,500 per year in “catch-up” contributions, bringing the total to $73,500.
What happens if you contribute too much to 401k?
If you exceed the maximum contribution limit, you have made what is known as an “excess contribution.” Excess contributions are subject to an additional penalty in the form of a 6% excise tax.
Deadline for Making 401(k) Contributions
So, while you can’t backdate a 401(k) contribution, under the tax code you can make 401(k) contributions as late as the deadline for the company to file its taxes, including any extensions.
Can I contribute 100% of my salary to my 401k?
The maximum salary deferral amount that you can contribute in 2023 to a 401(k) is the lesser of 100% of pay or $22,500. However, some 401(k) plans may limit your contributions to a lesser amount, and in such cases, IRS rules may limit the contribution for highly compensated employees.
What does 6% 401k match mean?
A common employee contribution percentage for a 401(k) matching program is 6 percent. That means when you commit 6 percent of your pre-tax annual income to the plan, your employer will put its own contribution into your account.
Employer Contributions
The maximum employer contribution is 25% of wage compensation. For an employee has taken a W-2 wage of $50,000, the company may make an employer contribution of $12,500 (25% of $50,000).