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> dump a buttload of pre-tax money into a 401(k)... About $53k in one year. That’s like double the IRS allowed maximum for pre-tax 401k deferral in a year, no?
by jsjohnst 6y ago
> dump a buttload of pre-tax money into a 401(k)... About $53k in one year.
That’s like double the IRS allowed maximum for pre-tax 401k deferral in a year, no? This is not my area of expertise so I could easily be unaware of something. Can you explain how you did this as I’m genuinely curious and want to do the same.
- neogodless 6y agonp-1 has it right. As a small business employing yourself, you can "profit share" much more than the $19k individual limit.
- JauntTrooper 6y agoThere's something that's often referred to as the "Mega Backdoor Roth" that lets you shelter an extra $37,500 per year beyond the traditional 401(k) limits.
- mercutio2 6y agoTrue, but that tax sheltering is of future income, it's not pre-tax in the normal-employee case.
- np- 6y agoThere is a separate, higher IRS max for employee+employer contribution (this is why many jobs can offer 401k matching), and that number is somewhere around $55k these days. But there is a loophole—when you are your own employer, i.e. self employed, you can contribute that full amount to your own 401k.