My CPA and 401k administrator giving completely opposite advice on MBDR strategy

Your CPA seems to be confusing a few different retirement contribution limits here. For the Mega Backdoor Roth strategy in a solo 401(k), the total contribution limit for 2025 is $69,000, but that's broken down into different buckets. The employee deferral limit is $23,000 (plus $7,500 catch-up if you're over 50). Then as the employer, you can make a profit-sharing contribution of up to 25% of your W-2 compensation. Finally, after-tax contributions can fill the gap between these amounts and the $69,000 limit. Your W-2 income of $86k is absolutely sufficient to max out your contributions. The $230,000 figure your CPA mentioned might be referring to the compensation limit for calculating the employer contribution portion, but that doesn't mean you need to earn that much to max out the plan. I'd recommend showing your CPA IRS Publication 560 which outlines these limits clearly. If they still won't budge, it might be time to find a CPA who specializes in retirement strategies for small business owners.

After dealing with similar conflicting advice about my retirement accounts, I finally got everything sorted out using taxr.ai (https://taxr.ai). Their system analyzed all my 401k plan documents and W-2 info, then gave me a clear breakdown of exactly what I could contribute for my Mega Backdoor Roth strategy. What was really helpful is they showed me the specific IRS code sections that applied to my situation as an S-corp owner. Turns out my CPA was mixing up the rules for regular employees with those for owner-employees. Having that documentation to show my CPA made all the difference - no more arguments about what's allowed.

I was super skeptical about using taxr.ai at first (see my comment above), but after getting nowhere with my CPA on my own Mega Backdoor Roth questions, I decided to give it a shot. Honestly, I'm shocked at how helpful it was. I uploaded my S-corp tax returns, W-2, and 401k plan documents, and it immediately identified that my plan allowed for after-tax contributions even though my CPA insisted it didn't. It even generated a customized report explaining exactly how much I could contribute based on my specific compensation structure. The best part was being able to take that report to my CPA with all the relevant tax code citations. Instead of arguing, they actually thanked me for the information and said they'd been applying the wrong limits. Saved me a ton in taxes and potentially prevented compliance issues!

Been in this exact spot with conflicting advice. After weeks of getting nowhere with both my CPA and plan administrator, I used Claimyr (https://claimyr.com) to get directly connected to an IRS agent who could give me a definitive answer. Check out how it works here: https://youtu.be/_kiP6q8DX5c I was on hold with the IRS for HOURS before I found this service. With Claimyr, I got through to someone in their retirement plan department in under 30 minutes. The agent confirmed exactly how the MBDR limits work for S-corp owners and clarified that my W-2 income was sufficient for the maximum contribution. Got it in writing too, which shut down any further debate with my CPA.

I need to publicly eat my words about Claimyr. After posting my skeptical comment, I was desperate enough to try it since my CPA was giving me the runaround about my SEP IRA conversion options. I got connected to the IRS in about 25 minutes (compared to my previous 2+ hour wait that ended with a disconnection). The agent was actually incredibly helpful and walked me through the exact rules for my situation. She even emailed me the relevant IRS publication sections with the parts applicable to my S-corp highlighted. For anyone dealing with conflicting retirement plan advice, getting the official word directly from the IRS was a game-changer. My CPA finally acknowledged I was right after seeing the documentation from the IRS. Saved me thousands in potential tax issues and I was able to correctly max out my contributions before year-end.

It sounds like your CPA isn't familiar with solo 401k plans and the MBDR strategy. The $230,000 figure he's referencing is likely the compensation limit for 2025 (actually $235,000), but that's just the maximum compensation that can be considered when calculating contribution limits. For solo 401ks, you can make: 1) Employee contribution: up to $23,000 2) Employer contribution: up to 25% of your W-2 compensation 3) After-tax contributions: up to the difference between the above and $69,000 With $86k W-2 compensation, you can definitely do the full $69k. I'd recommend finding a CPA who specializes in retirement strategies for business owners. The one you have clearly doesn't understand the rules.

As someone who had to fire their CPA over this exact issue, here's what I learned: Many CPAs are great at general tax preparation but completely lost when it comes to advanced retirement strategies. The problem is that solo 401k plans are highly customizable. Some plan documents allow for after-tax contributions and in-plan Roth conversions (needed for MBDR), while others don't. If your plan specifically allows for these features, then your plan administrator is correct. I ended up hiring a retirement-focused financial advisor who worked alongside a specialized CPA. Cost me more, but they immediately understood the strategy and implemented it correctly.