Do I report both Employee and Employer Solo 401k contributions on my W-2? - My Solo 401k Financial (2024)

FAQs

Do I report both Employee and Employer Solo 401k contributions on my W-2? - My Solo 401k Financial? ›

Voluntary after-tax Solo 401k contributions may be reported in Box 14 of the W-2 (Optional). Employer Solo 401k contributions are not reported on the w-2.

List your Solo 401(k) employer contribution on line 23. You will also need to fill out Form 5500 or 5500-SF if your account balance is over $250,000. And, on a personal level, you will need to fill out the employee contribution on box 12 of your W2.

If you made employee pre-tax contributions to your Solo 401k, report them on Schedule 1, Line 16 of your 1040 tax return. These contributions will reduce your taxable income for the year.

Per IRS guidelines, your employer doesn't include your pre-tax contributions in your taxable income because your 401(k) contributions are tax-deductible. Instead, they report your contributions in boxes 1 and 12, respectively, of your form W-2.

With a solo 401(k), you can make contributions in 2 ways: as the employee and as the employer.

It acts and is treated like any other 401(k) plan. Essentially, this plan has the sole owner and sole employee making contributions to the same one plan. This means you will report the total amount (as sole owner and sole employee) contributed as an adjustment on Schedule 1, line 16.

A one-participant 401(k) plan is generally required to file an annual report on Form 5500-EZ if it has $250,000 or more in assets at the end of the year. A one-participant plan with fewer assets may be exempt from the annual filing requirement.

Claim deductions by entering your total contributions on line 28 of Form 1040 Schedule C for self-employed individuals, or on the deductions worksheet for corporations. For assets over $250,000, file IRS Form 5500-EZ.

Individual 401(k) plans for the self-employed (also called solo 401(k) or solo-K plans) are entered in the Other Business Situations section of Income & Expenses in TurboTax. Note: If your TurboTax navigation looks different from what's described here, learn more.

Solo 401k plans are intended for one business owner and your spouse. If your business has partners other than your spouse (business partners, other LLC members, shareholders, etc), you'll receive a special type of Solo 401k plan.

How to report 401k contributions on tax return? ›

If you have a 401(k) plan, contributions you make for yourself (including your employer contribution) are deductible on line 28 of your Form 1040 (excluding elective Roth deferrals). Contributions you make for employees are deductible on line 19 of your Schedule C.

Contributions to a traditional 401(k) are made with pre-tax dollars—meaning the money goes into your retirement account before it gets taxed. With pre-tax contributions, every dollar you save will reduce your current taxable income by an equal amount, which means you'll owe less in income taxes for the year.

Even though they are deductible by the company, employer contributions are not included in the employee's gross income until distributed,* and they are exempt from both the employer and employee portions of Federal Insurance Contributions Act (FICA) Medicare and Social Security, Federal Unemployment Tax Act (FUTA), and ...

Of course you can have an employer sponsored 401(k) as an employee and also have a Solo 401(k) as a business owner. See this website for information - https://www.investopedia.com/ask/answers/100314/do-i-need-employer-set-401k-plan.asp#:~:text=If%20yo....

Drawbacks to the solo 401(k)

Like other 401(k) plans, the solo 401(k) will hit you with taxes and penalties if you withdraw the money before retirement age, currently set at 59½.

A solo 401(k) is an individual 401(k) designed for a business owner with no employees. In fact, IRS rules say you can't contribute to a solo 401(k) if you have full-time employees, though you can use the plan to cover both you and your spouse.

Employee Solo 401k contributions (elective deferrals) made as a Roth contribution do not reduce the amount reported in box 1 (since they are made on a post-tax basis) and are also reported in Box 12 (Code AA). Voluntary after-tax Solo 401k contributions may be reported in Box 14 of the W-2 (Optional).

Individual 401(k) plans for the self-employed (also called solo 401(k) or solo-K plans) are entered in the Other Business Situations section of Income & Expenses in TurboTax. Note: If your TurboTax navigation looks different from what's described here, learn more.

The trustee of the solo401K will issue the 1099-R to you ... you do not need to issue one to yourself. Ask the trustee when the 1099-R will be issued.

Contributions to a solo 401(k) are usually made with pre-tax dollars, which reduces your current taxable income. However, the tax treatment is different when you establish a Roth account. For this type of solo 401(k), you would pay taxes upfront on your contributions.