Can you clarify section 6: does the money come from the business account or my personal checking account? And do I have to pay SS and Medicare on it like a traditional 401k? Does the contribution appear anywhere on the W2 or 1040?
Thanks for your questions. Based on our research, our understanding is that Solo 401(k) contributions can come from either your business or personal checking account. However, they can’t exceed $55,000 ($61,000 if you’re over 50). In answer to your second question, Solo 401(k) contributions ARE still subject to Medicare and social security taxes, but not ordinary income tax.
For more information on Solo 401(k)s and how they work, you’re welcome to check out our ultimate guide to Solo 401(k)s here: https://fitsmallbusiness.com/individual-solo-401k-rules-contribution-limits/