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Calculating one's maximum annual solo 401 (k) contribution limitation, including employee deferrals and profit sharing contributions, is based on self-employment income or W-2 income earned by the plan participant and the adopting employer's established legal entity (sole proprietorship vs. "C" corporation).

Contribution Limits. Employee contribution limit of $20,500/yr for under 50; $27,000/yr for age 50 or above in 2022; limits are a total of pre-tax Traditional 401 (k) and Roth 401 (k) contributions. Total employee (including after-tax Traditional 401 (k)) and employer combined contributions must be lesser of 100% of employee's salary or $58,000 ...

The contribution limits of the 2020 401 (k) stated that the contribution limit is $19,500. If an employee reached the age of 50 by December 31, 2020, they could save an additional $6,500 in their 401 (k), for a total savings of $26,000. [12] References [ edit] ^ Ann, Lee (2002-03-21). "HowStuffWorks "How 401 (k) Plans Work" ".

The Economic Recovery Tax Act of 1981 (ERTA) removed the pension plan clause and raised the contribution limit to the lesser of $2000 or 100% of earned income. The 1986 Tax Reform Act retained the $2000 contribution limit, but restricted the deductibility for households that have pension plan coverage and have moderate to high incomes.