The most that you can contribute as a self-employed person in your Individual 401(k) in 2020 is $57,000 if you are under 50 years old. If you are over 50 years old, the amount increases to $63,500.
Individual 401(k) contributions are made up two parts; an employee contribution and an employer contribution. The maximum employee contribution for 2020 is $19,500 if you are under 50 years old and $26,000 if over 50 years old (this can be up to 100% of your self-employment income). The maximum employer contribution for 2020 is 20% of your net self-employment income up to the total limit of $37,500.
An Individual 401(k) is also called an i401(k), Solo 401(k), One-Participant 401(k) or a Self-Employed 401(k).
What is the Deadline for Individual 401(k) Contributions?
An Individual 401(k) plan must be adopted by the last day of the tax year for which the self-employed person makes employer and employee contributions. Additionally, the self-employed individual must elect to make his or her employee deferral contribution by 12/31. However, the actual contribution must be made by the tax deadline for the year.
Learn more about the tax advantages of Individual 401(k) accounts.
Learn more about small business and self-employed retirement plans.
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