FAQs
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.
How to report Solo 401k on 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.
How to record Solo 401k contributions? ›
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.
Should employer contributions to 401k be reported on W-2? ›
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.
Are Solo 401k contributions employer or employee? ›
With a solo 401(k), you can make contributions in 2 ways: as the employee and as the employer.
How are Solo 401k contributions reported to the IRS? ›
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.
What reporting is required for a Solo 401k? ›
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.
Where do I deduct Solo 401k contributions for self-employed? ›
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.
Where do I enter my Solo 401k contributions on TurboTax? ›
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.
Can a Solo 401k have two participants? ›
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.
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.
Are 401k contributions reported as income? ›
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.
Do I include employer contributions on my tax return? ›
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 ...
Can you have a solo 401k and a W2 401k? ›
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....
What is the downside of a solo 401k? ›
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.
What happens if I have a solo 401k and hire an employee? ›
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.
What is the box 12 code for Solo 401k? ›
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).
Where do I enter a Solo 401k in TurboTax? ›
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.
Who issues the 1099 R for a Solo 401k? ›
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.
Is a Solo 401k taxable income? ›
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.