r/tax•
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Solo 401k Profit Share vs MBDR

I've been running numbers for next year. My wife has a solo 401k for consulting work she does. Anticipated taxable income is ~475k, net consulting income is ~68k for the year. Since we're in the QBI phaseout range, my calculations show my two best options are max her $24.5k employee contribution and then evaluate how much of an employer profit share she should take (0-25%). My understanding is as the percentage of employer profit share increases, the amount available for MBDR decreases. If she takes 0% profit share, she can contribute $38696 to MBDR vs taking 25% profit share for additional $12639 in pre-tax 401k and then a reduced amount of $13418 in MBDR. Since we're in a 32% marginal tax bracket, the cost of forgoing an additional $12639 in pre-tax deduction is $3886 (when accounting for the slight increase in QBI deduction at 0% profit share). My question is, would you pay $3886 in additional taxes now for ~$25,000 in additional Roth space? Am I even thinking about this in the correct way? Considering the extra allotment in pre-tax 401k via profit share will likely be ultimately withdrawn at a 22% marginal rate, the ultimate tax savings might only be ~$1000 at best so leaning heavily into MBDR seems to be the correct move but not sure I'm thinking about this the right way.

Posted Jul 9, 2026, 7:48 PM UTC

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