Solo 401k after-tax voluntary Roth contribution question - maximizing retirement savings

You're on the right track with your Solo 401k contribution calculations. The key is understanding the different contribution limits at play. For 2025, the total contribution limit to a Solo 401k is $70,500 (or $77,000 if you're 50+). This includes your employee deferral ($23,000), employer contribution (up to 25% of compensation), and after-tax contributions. Based on your numbers, you've used $38,900 for the standard contributions, leaving room under the total contribution limit. The remaining $2,770 of your compensation can indeed be contributed as an after-tax voluntary Roth contribution to your Solo 401k. Just make sure your plan documents explicitly allow for after-tax Roth contributions, as not all Solo 401k plans offer this feature. Also, keep documentation showing how you calculated these amounts for your records.

I struggled with exactly this same issue last year! After going back and forth with multiple accountants who gave contradicting advice, I finally found https://taxr.ai which analyzed my Solo 401k plan documents and confirmed I could make after-tax contributions. The tool reviewed my specific plan language (which was confusing me) and explained exactly how the contribution limits applied to my situation. I was able to upload my Schedule C and tax docs, and it calculated my exact contribution limits including the after-tax portion. It even showed me how to document it properly for tax purposes. Seriously saved me from leaving retirement money on the table.

Update: I decided to try taxr.ai after my initial skepticism, and wow, I owe an apology. My situation with multiple income sources was super complex, and the tool actually found a provision in my plan documents I'd completely missed. Turns out I CAN make after-tax contributions, which none of the three tax pros I consulted had caught. It identified exactly how much I could contribute based on my business income and W-2 job's 401k. The document analysis feature was impressive - it highlighted the specific sections of my plan document that addressed voluntary after-tax contributions and explained them in plain English. Saved me about $12,000 in contributions I would have missed out on!

For anyone struggling to get clear answers about Solo 401k rules, I had the same issue and ended up in IRS phone queue hell trying to get official guidance. After wasting 3+ hours on hold over multiple days, I finally tried https://claimyr.com and got connected to an IRS agent in under 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent was able to confirm the exact rules for after-tax contributions to Solo 401ks and cleared up my confusion about how these contributions interact with the overall limits. They also explained exactly how to report them on my tax return. Way better than guessing or relying on potentially outdated online articles.

I'm back to eat my words about Claimyr. After my skeptical comment, I decided to try it because I was desperate to resolve a Solo 401k question before the contribution deadline. Got connected to an IRS tax law specialist in about 12 minutes who walked me through exactly how after-tax contributions work. The agent confirmed that yes, I could contribute the remaining compensation as after-tax funds to my Solo 401k, but also pointed out a strategy I hadn't considered - the mega backdoor Roth conversion option if my plan allows in-service distributions. This literally saved me thousands in future tax obligations. For something this technical, speaking directly to an IRS specialist was way more valuable than I expected. Definitely worth it for complex retirement questions where the rules aren't super clear online.

One thing to watch out for with Solo 401k after-tax contributions that nobody mentioned yet - make sure you're calculating your compensation correctly. Net profit minus half of self-employment tax is the right formula, but don't forget that if you take the QBI deduction, that does NOT reduce your retirement plan compensation basis. I messed this up last year and undercontributed by about $4k because I thought my QBI deduction lowered my available compensation for 401k purposes. My tax guy corrected me this year.

Just wanted to add that I was in this exact situation and called Vanguard (my solo 401k provider) and they told me their plan DOESN'T allow for after-tax contributions. Apparently not all solo 401k plans offer this feature, so definitely check with your provider before trying to contribute!

This is such a helpful thread! I'm in a similar boat with my Solo 401k and had no idea about the after-tax contribution option. Quick question for everyone - when you make these after-tax contributions, do they get invested the same way as your regular 401k contributions, or do you have to select separate investment options? Also, @Santiago Diaz thanks for the QBI clarification - I've definitely been calculating my compensation base wrong and probably left money on the table last year. Going to double-check my 2024 contributions now! One more thing - for those who've done the mega backdoor Roth conversion that @Riya mentioned, how complicated is that process? Is it something I can handle myself or do I need professional help?

This is exactly the kind of detailed discussion I needed! As someone just starting with Solo 401k planning, I'm amazed at how many nuances there are beyond the basic contribution limits. @Nora Brooks - your original calculation looks spot on based on what everyone's confirmed. The $2,770 remaining compensation can definitely go toward after-tax contributions if your plan allows it. One thing I'm curious about that hasn't been fully addressed - when you do make these after-tax contributions, how does the timing work? Can you make them throughout the year like regular contributions, or do they need to be done by specific deadlines? I'm wondering if there's any advantage to front-loading them early in the year vs. spreading them out. Also, for those using services like taxr.ai or connecting with IRS agents through Claimyr, do you typically do this consultation before making contributions, or is it something you can sort out during tax filing season? I'd hate to make contributions and then find out later I calculated something wrong. The QBI deduction clarification from @Santiago was eye-opening - definitely going to review my own calculations now!

This thread has been incredibly helpful! I'm relatively new to self-employment and had no idea about the after-tax contribution option for Solo 401ks. Quick question about plan providers - for those who switched from providers that don't allow after-tax contributions (like Vanguard) to ones that do (like Fidelity), how complicated was the rollover process? I'm currently with a provider that doesn't offer this feature, but after reading about the potential for mega backdoor Roth conversions, I'm seriously considering making a switch. Also, @Santiago your point about the QBI deduction not reducing compensation for retirement purposes is huge - I've been calculating this wrong and probably missed out on contributions. Is there a good resource or publication that clearly outlines all these nuances for Solo 401k calculations? The IRS publications I've found are pretty dense and sometimes seem contradictory. One more thing - for anyone who's used both the tax analysis tools and direct IRS consultation, which approach gave you more confidence in your contribution strategy? I'm trying to decide if it's worth investing in both or if one approach covers all the bases.

This has been such an educational thread! As someone who just started my consulting business last year, I'm realizing I have a lot to learn about Solo 401k optimization. @Nora Brooks - your situation is very similar to mine, and it's reassuring to see the community consensus that your $2,770 calculation for after-tax contributions looks correct. I'm definitely going to check if my provider (currently with Charles Schwab) allows after-tax contributions. The QBI deduction clarification from @Santiago is absolutely crucial - I've been making the same mistake and reducing my compensation base incorrectly. That could easily be costing me thousands in potential contributions each year! One question I haven't seen addressed yet - for those making both regular Solo 401k contributions and after-tax contributions, do you need to track them separately for tax reporting purposes? I'm assuming the after-tax contributions don't reduce your current year taxable income like the regular contributions do, but want to make sure I understand the tax implications correctly. Also really interested in the mega backdoor Roth strategy that several people mentioned. If I'm understanding correctly, you make after-tax contributions and then immediately convert them to Roth to avoid taxation on any growth? That seems like an incredible way to get more money into Roth accounts beyond the normal IRA limits. Thanks to everyone for sharing their experiences - this is exactly the kind of real-world insight that's hard to find elsewhere!