Solo-K for SE Income

[SMB]

Individual expects to receive $12,000 of self-employment income for 2008 and is considering adopting a Solo-k Plan by year-end in order to shelter all - or as much as possibe - of same. Was wondering how FICA is handled or interacts in determining the "net" amount that can actually be deferred?

Thanks!

[K2retire]

1/2 of the SE tax is deducted from the gross profit in determining the earned income for plan purposes. There's more to the calculation than that, but that is the first step.

[Appleby]

Step by step instructions are in Pub 560 at irs.gov

[SMB]

Thanks - Pub 560 is quite helpful - especially the worksheets (except that the worksheets don't show an example with employee salary deferrals).

So, a couple more questions -

Can the individual in my example above make an employee salary deferral contribution of the full $12,000 "net profit" or just the "net" amount after reduction by 1/2 of the S/E tax (~$11,152 if I calculated correctly)?

Are both employee salary deferral contributions and employer contributions reported and deducted together on Line 28 of the S/E individual's Form 1040?