First Year Solo 401k Elective Deferral

Retirement

I setup a Solo 401k in December 2021, and made an initial contribution. I didn't really think much about it, but I should have done all the contributions at tax time so I can optimize my taxes (no biggie). I know I want to max out the employer matching (profit sharing) portion as that reduces my tax liability, and it HAS to go to the Trad 401k. I used several websites to calculate the numbers based on my profit.

Here's my question: Is there any logic to how I should contribute the elective deferrals? My thought was dump it mostly or all in the Roth 401k, because I'm not worried about a tax refund now. I'm fine with getting $0 back from my federal return. Or should I be putting it all towards the Trad 401k?

Also, my wife and I each have Trad IRAs that I setup a few years ago. So, I have that deduction as well. Unknowingly in other years I probably only got a partial deduction. I guess I should check MAGI so that we can maybe get the full deduction with the Trad IRA. Maybe that would help me decide how to allocate the employee portion on the Solo401k.

Posted Apr 6, 2022, 3:29 PM UTC

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