Elective Deferral

An elective deferral is the slice of your paycheck or self-employment income you choose to redirect into a 401(k) before income tax (Traditional) or after (Roth). For 2026 the IRS caps it at $23,500 per person across every 401(k) you participate in, not per plan. Inside a Solo 401(k) you wear two hats: as employee you make this deferral; as employer you also add profit sharing on top. The deferral is reported on W-2 box 12 (code D for Traditional, AA for Roth) for S-Corp owners. Sole proprietors pull from net Schedule C earnings instead. Hit the $23,500 wall and your only way to add more is the catch-up at 50, the super catch-up at 60–63, or the employer profit-sharing bucket. Note that day-job 401(k) contributions count against the same $23,500, only the combined cap resets per unrelated employer.