Harvard Law Attorney George Blower leads an in-depth discussion of the 2022 and 2023 Mega Backdoor Roth Solo 401k Self-Directed Solo 401k Contribution Limits & Types for self-employed businesses taxed as Sole Proprietors, 1099-NEC/MISC Independent Contractors, Single Member LLCs including Secure Act 2.0 Update!

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The solo 401k plan, commonly referred to as self-directed Solo 41k is the retirement plan of choice for self-employed individuals or owner-only businesses including for the features highlighted below:

-The highest contribution limits for any defined contribution plan including up to $61,000 (or even $66,500 if you are 50 or older) for 2022 (for 2023: $66k or $73.5 if you are 50 or older).

-The ability to make pre-tax, Roth, and even Mega Backdoor Roth contributions.

-401k participant loans of up to $50,000

-Invest with checkbook control in real estate, cryptocurrencies, notes, private placements, and other types of alternative investments.

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For over 10 years, My Solo 401k Financial is the leading self-directed solo 401k provider having helped over 8,000 clients take control over their retirement funds by focusing on superior knowledge, expertise, and customer service with over 100+ 5-star verified customer reviews on the Better Business Bureau (BBB)….(read more)

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As a sole proprietor or 1099 contractor, it is important to understand the new rules for Solo 401k contributions under the Secure Act 2.0. The Secure Act 2.0, which was signed into law in December 2020, made several changes to the retirement savings landscape, including increasing the maximum age for contributions and expanding the list of eligible participants. This guide will provide you with the information you need to make the most of your Solo 401k contributions in 2022 and 2023.

The Secure Act 2.0 increased the maximum age for Solo 401k contributions from 70 ½ to 72. This means that you have until age 72 to make your annual contributions to your Solo 401k. Additionally, the Secure Act 2.0 expanded the list of eligible participants to include part-time employees who work at least 500 hours per year. This means that you can now include part-time employees in your Solo 401k plan.

The maximum contribution limit for Solo 401k plans in 2022 and 2023 is $58,000. This amount includes both the employee and employer contributions. However, the maximum employee contribution is limited to $19,500 for 2022 and $19,500 for 2023. If you are age 50 or older, you can make an additional catch-up contribution of $6,500 for 2022 and $6,500 for 2023.

The employer contribution limit is the lesser of 25% of your net self-employment income or $58,000. This means that you can contribute up to 25% of your net self-employment income or $58,000, whichever is less. For example, if your net self-employment income is $100,000, you can contribute up to $25,000 as an employer contribution.

It is important to note that the contribution limits are subject to change in future years. Therefore, it is important to stay up to date on the contribution limits for your Solo 401k plan.

Finally, it is important to understand the tax implications of your Solo 401k contributions. Contributions to a Solo 401k plan are tax-deductible, and the funds in the plan grow tax-deferred. However, you will be subject to taxes on distributions from the plan. Therefore, it is important to consider the tax implications of your contributions before making any decisions.

In conclusion, the Secure Act 2.0 has made significant changes to the rules for Solo 401k contributions. This guide has provided you with the information you need to make the most of your Solo 401k contributions in 2022 and 2023. Be sure to stay up to date on the contribution limits and tax implications of your contributions so that you can maximize the benefits of your Solo 401k plan.