A normal 50 sole proprietor client in 2025 who is the sole participant of a 401(k) plan. Client is not participating/deferring in any other plans.
Below is how we calculated the contribution breakdown for 2025, to simplify the numbers we are using $23,500 as the net Schedule C income after SE taxes:
25% PS contribution: $4,700
Deferral: $14,100
Catch-up: $4,700
Total contribution is $23,500 and the earned income for the plan is $18,800
Question:
So the net maximum contribution is no different than had the participant made $23,500 401(k) and no employer contribution. Do you agree the maximum total deductible contribution for this owner is $23,500?
