Author Topic: 401k Contribution Limits for Self Employed Couple?  (Read 3247 times)


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401k Contribution Limits for Self Employed Couple?
« on: April 13, 2018, 09:42:47 AM »
Love the blog! Quick question:

Me and my wife are both self employed. We are both sole proprietors (different businesses) and we file our taxes jointly. I'd like to start contributing as much of our earnings as possible to a self employed 401k. One day when we sell our businesses and have zero income, I'd like to start converting those 401k funds into a Roth IRA (or Roth 401k) and avoid taxation.

My questions are:

1) In our situation, how much can we both contribute in 2018?
2) Do we need to each have our own individual 401k or should it be combined into one?
3) When the time comes, is there any benefit to converting to a Roth IRA vs a Roth 401k?

Apologies in advance for such basic questions. Just learning how all this works!

Thanks again for a fantastic blog!



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Re: 401k Contribution Limits for Self Employed Couple?
« Reply #1 on: April 14, 2018, 03:00:41 AM »
Hey Edward

The 401k limit for employees in 2018 is $18,500. The employer can contribute up to 20% of profit, or 55k-18.5k, whichever is lower.

The 401k is for the business, so each business has to have a different 401k.

There is no option to convert to a 401k, IRA only.