self employed catch up

A self employed individual has net income of 29,725.  He also has unrelated employer W-2 income of 192,884.90 and employee deferral of $6,000 contributed to the unrelated employer's retirement plan.  Is the catch up contribution, which will be contributed to his self employed 401k, subject to the 100% of comp limit or is it in addition to?  

401k catch-up contributions are not subject to either the statutory (2019 = $56K) or 100% of compensation annual addition limit. The catch-up contribution only applies after the employee deferral limit (2019 = $19K) is reached.

What do you mean by net income, business profits or self-employed earned income (business profits - 1/2 SE tax). Assume the latter, the self-employed individual can make an employee deferral of $19K - $6K = $13K + $6K catch-up = $19K to a one-participant 401k.

The maximum employer contribution is the lessor of 20% of self-employed earned income $29,725 * 20% =  $5,945 or (self-employed earned income $29,725 - employee deferral* $13K = $16,725) / 2 = $8,363. The maximum employer contribution would be $5,945.

*Employee deferral not including the catch-up contribution, because it is not included for purposes of the 100% of compensation annual addition limit. 

At low levels of self-employment earned income with a W-2 401k. It is best to make most if not all the employee deferrals to the W-2 401k plan. E.g. With $20K in self-employed earned income, $19K in employee deferrals and $1K in catch-up contributions, no employer contributions would be allowed.

Additionally, with the new section 199A 20% QBI deduction, qualified business income is reduced by the amount pre-tax retirement plan contributions. In the above scenario there are no employer contributions and no QBI deduction. If the maximum employee deferral and catch-up contribution were made to the W-2 401k plan. $20K * 20% =  $4K in employer contributions could be made and ($20K - $4K = $16K) * 20% = $3.2K in a QBI deduction. This assumes the individual is eligible for the QBI deduction based on SSTB status, tax filing status and taxable income.

 At low levels of compensation, you should also keep in mind that deferrals plus catch-up for the taxable year can not exceed the participant's 415(c) compensation. I don't think you have a problem with your fact pattern, but you would if he tried to make the maximum deductible employer contribution and defer $25,000 into the SE plan.

Quote

1.414(v)-1(c) Catch-up contribution limit—(1) General rule. Elective deferrals with respect to a catch-up eligible participant in excess of an applicable limit under paragraph (b) of this section are treated as catch-up contributions under this section as of a date within a taxable year only to the extent that such elective deferrals do not exceed the catch-up contribution limit described in paragraphs (c)(1) and (2) of this section, reduced by elective deferrals previously treated as catch-up contributions for the taxable year, determined in accordance with paragraph (c)(3) of this section. The catch-up contribution limit for a taxable year is generally the applicable dollar catch-up limit for such taxable year, as set forth in paragraph (c)(2) of this section. However, an elective deferral is not treated as a catch-up contribution to the extent that the elective deferral, when added to all other elective deferrals for the taxable year under any applicable employer plan of the employer, exceeds the participant's compensation (determined in accordance with section 415(c)(3)) for the taxable year. See also paragraph (f) of this section for special rules for employees who participate in more than one applicable employer plan maintained by the employer.

Thank you.  I appreciate your assistance.