Participation in both Solo 401k and 403b with Different Employer

[jukeboy56]

I'm trying to determine how the deferral and contribution limits work in this situation. We have a person (Joe) self-employed for the first half of the year with a Solo 401k plan. During the second half of the year Joe goes to work for an employer offering a 403b plan.

We understand that the total deferrals for the year are limited to $14,000 total in both plans combined. We also understand that the limit on total contributions to the Solo 401k is $42,000 including any deferrals in that plan.

Assuming self-employment earnings (after subtracting 1/2 SE tax) were at least $210,000 could Joe forego making deferral contributions to the Solo 401k and instead make only a profit sharing contribution of $42,000 and then make deferrals with the new employer's 403b plan of $14,000?

I suppose he could acheive the same thing by using a SEP plan for the SE income, if the Solo 401k plan weren't already in place. right?

[E as in ERISA]

That makes sense to me. The primary purpose of the Solo 401(k) is to increase the amount of contributions for those who have lower income and whose total contributions would be limited by the 404 deduction limits (since 401(k) contributions aren't considered). If he has sufficient income to make a full profit sharing contribution, there should be no reason to use the 401(k) mechanism.

[austin3515]

EI must be $168K after subtracting SE tax AND the $42,000 (42,000/168,000 = 25%).

[R. Butler]

Assuming self-employment earnings (after subtracting 1/2 SE tax) were at least $210,000 could Joe forego making deferral contributions to the Solo 401k and instead make only a profit sharing contribution of $42,000 and then make deferrals with the new employer's 403b plan of $14,000?

I'll say upfront that we don't do much with 403(b) plans, but isn't Joe treated as the owner of his 403(b)? For purposes of the 415© limit wouldn't the 403(b) plan be aggregated with any other plan sponsored by an employer that Joe controls?

[Appleby]

AFAIK Butler, you're right ...

[jukeboy56]

For purposes of the 415© limit wouldn't the 403(b) plan be aggregated with any other plan sponsored by an employer that Joe controls?

It appears from what I'm reading that you are correct. Thank you for pointing this out.