Profit Sharing (Employer Contribution)

The employer half of a Solo 401(k). You as the business owner contribute up to 25% of W-2 wages (S-Corp) or about 20% of net self-employment earnings (sole prop / single-member LLC). The 20% looks weird, it's actually 25% applied to a smaller base because the contribution itself is deductible. Either way it stacks on top of your $23,500 elective deferral, capped at the $70,000 combined limit for 2026 (or $77,500 / $81,250 with catch-ups). Employer profit sharing is always Traditional pre-tax; the SECURE 2.0 Roth employer option is on paper but barely supported by providers in 2026. It's also the line that lets you deduct the contribution from your business return.