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Individual 401k Contribution Limits

2017-09-10

The 2017 Individual 401k contribution limits are $54,000 and $60,000 if age 50 or older. The annual Individual 401k contribution consists of 2 parts a salary deferral contribution and a profit sharing contribution. The total allowable contribution adds these 2 parts together to get to the maximum Individual 401k contribution limit.

Individual 401k contribution calculation for an S or C corporation or an LLC taxed as a corporation

  • Salary Deferral Contribution
    In 2017 100% of W-2 earnings up to the maximum of $18,000 or $24,000 if age 50 or older can be contributed to an Individual 401k.
  • Profit Sharing Contribution
    A profit sharing contribution up to 25% of W-2 earnings can be contributed into an Individual 401k.

Learn more about the Individual 401k Contribution Limits for a for an S or C corporation or an LLC taxed as a corporation.

Individual 401k contribution calculation for a sole proprietorship, partnership or an LLC taxed as a sole proprietorship.

  •  Salary Deferral Contribution
    Although the term salary deferral is used, these businesses do not provide a W-2 salary to the business owner. For businesses of this type, the salary deferral contribution is based on net adjusted business profit. Net adjusted business profit is calculated by taking gross self employment income and then subtracting business expenses and then subtracting 1/2 of the self employment tax. In 2017 100% of net adjusted business profits income up to the maximum of $18,000 or $24,000 if age 50 or older can be contributed in salary deferrals into an Individual 401k.
  • Profit Sharing Contribution
    A profit sharing contribution can be made up to 20% of net adjusted businesses profits. Net adjusted business profit is calculated by taking gross self employment income and then subtracting business expenses and then subtracting 1/2 of the self employment tax. You will want to ask your tax professional for assistance with this calculation.

Learn more about the Individual 401k Contribution Limits for a sole proprietorship, partnership or an LLC taxed as a sole proprietorship.

 

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Disclosures:

*The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

*Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.