Day Job + Side Hustle: Stacking a Solo 401(k) on Top of Your Corporate 401(k)

Sample case: $140k W-2 salary at a tech company with their own 401(k), plus $40,000 net 1099 consulting on the side, age 35.

The shared $23,500

The employee elective deferral cap is per-person, not per plan. Already deferring $23,500 in the corporate 401(k)? You cannot defer another dollar in the Solo 401(k). It is a hard ceiling. Trying to do both will trigger an excess deferral letter from your provider in January.

The fresh $70,000 ceiling

The combined $70,000 limit, however, is per unrelated employer. Your day job and your side LLC are unrelated employers. So you keep the corporate 401(k) maxed at $23,500 + whatever match, and on the Solo 401(k) you only contribute the employer profit-sharing share: 20% × ($40,000 × 92.35%) = $7,388.

Total this year

$23,500 (corp deferral) + corporate match (often $7-10k) + $7,388 (Solo employer share) = roughly $38-40k tucked away. Not bad for a side hustle that started as a hobby.

Why the Solo 401(k) is still worth opening

The $7,388 saves about $1,773 in federal tax at 24%. More importantly, you now have a Solo 401(k) account ready to absorb the deferral if you ever leave the day job. Setup at most discount brokers (Fidelity, Schwab, E*TRADE) is free.

The Roth IRA also stacks

Both 401(k)s are separate from the $7,000 Roth IRA limit (income permitting, phase-out around $150k single MAGI). Three buckets, three separate caps.