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If you have a 401k or a 403b or a solo 401k and you pay yourself as a w-2 employee i’m going to walk you through three examples on how you can make the maximum contribution to your retirement plan so these numbers are going to be for 2022. so the 2022 maximum contributions has what’s called a 415 limit and that is a total of up to 61 000 if you’re under the age of

50 and an additional 6 500 if you’re over the age of 50 as a catch-up contribution 50 or older now there’s three types of contributions that are inevitably going to be put into your retirement plan and that is going to be the employee side the employer side and i put a third one down here as a non-deductible contribution and i’ll explain what that is in a couple of

Minutes so the first one is going to be the employee contribution now whether or not you’re a small business owner or an employee you’re going to be an employee for these purposes so the maximum that you can put in is going to be 20 500 for 2022 and that could be in either the traditional side or the roth side the combination of those two as an employee deferral is

Going to be twenty thousand five hundred dollars so for example if we earn fifty thousand dollars we can make a twenty thousand five hundred dollar contribution here we could do the same thing if we earn eighty thousand dollars so twenty thousand five hundred here and again if we’re earning a hundred and fifty thousand dollars we can do the maximum twenty thousand

Five hundred dollars now the examples i’m going to go through are going to be for somebody that’s under the age of 50 but you could just tack on that contribution to these numbers so the employer side is going to be uh either a match if it’s a retirement plan at work or if you have a solo 401k and you’re paying yourself as a w-2 then it’s going to be a profit sharing

Contribution they’re basically the same thing as far as you’re concerned the only difference here is you have a retirement plan at work that will be a match and that will be dependent on how much money you’re putting in or what percentage of your salary that you’re putting in so the employer side we can put in a maximum of 25 so it can be anything below 25 so it’s a

Retirement plan at work it’s usually between three and six percent but if you have a solo 401k it’s up to 25 so let’s assume that we’re maximizing the amount of the profit sharing contribution which is going to be the 25 so i’ll go ahead and i will pull up my calculator here so we can see this together and i’m just going to walk you through the math it’s going to

Be 20 25 of 50 000 so we’ll just put it in here fifty thousand dollars times 0.25 so the maximum that we can put in is twelve thousand five hundred dollars as an employer contribution and then for the eighty thousand it’s going to be the same math so we’re gonna put in the eighty thousand dollars multiplied by point two five and you can see that’s twenty thousand

Dollars and then we’re going to do the same thing for a hundred and fifty thousand dollar earner so it’s going to be a hundred and fifty thousand dollars times point two five so it’s going to be thirty seven thousand uh thirty seven thousand five hundred dollars so let me go ahead and add these up really quickly so we can see where we’re at right now so right here

We have our twelve thousand five hundred dollars plus our twenty thousand five hundred dollars and that’s going to be thirty three thousand so i’ll write thirty three thousand there and then for here we have that one’s easy forty thousand five hundred dollars and then we have what do we have here we have thirty seven forty seven fifty seven fifty eight thousand

Dollars right there so that is where we’re at with these current contributions now again this could be split up anyway the employer side is always going to go to the traditional side now that’s not going to affect your taxes that is going to affect the employer side as a deduction so if you have a solo 401k this is going to be basically a business expense and of

Course your your employer if you have a workplace plan will be able to write off on their taxes but it has no bearing on your taxes it just gets contributed to the traditional side of your retirement plan so for example let’s say i put in the full 20 500 to my roth 401k then the full contribution to the match side is going to go to the traditional side regardless

And that is the same if it’s a workplace plan or a solo 401k it goes to the traditional side only now 61 000 is the max that we can put in for 2022. so what this means is that if we have 61 000 and we subtract our thirty three thousand dollars here that means we can put in an additional twenty eight thousand dollars into our retirement plan in this example however

There is something called 415 limits and the 415 limit state that you can either do sixty one thousand dollars or it’s the lesser of the sixty one thousand dollars or this fifty thousand so the maximum that we can actually put into this plan can only go up to fifty thousand dollars which is inclusive of this employer or match or profit sharing contribution so we

Can’t actually put in our twenty eight thousand dollars what it is is fifty thousand dollars minus our thirty three thousand dollars and that is going to be an additional seventeen thousand dollars and that could be a non-deductible contribution a non-deductible contribution is is similar to a roth contribution where it is after tax but it goes to the traditional

Side of your your retirement plan now you can immediately convert it over as long as your plan documents allow for this and as long as they also allow for non-deductible contributions if that is the case this is called the mega backdoor roth strategy so this is where you’re putting in the seventeen thousand dollars to the traditional side of your retirement plan

Like a 401k and then immediately putting it over to the roth 401k that is the mega backdoor roth strategy so with the eighty thousand dollars because it’s above the 61 000 then this becomes our cap 61 not in this case it was 50 but in this case it’s going to be the 61 000. so we have forty thousand five hundred dollars so if we have sixty one thousand dollars minus

Our forty thousand five hundred dollars that means we can make a non-deductible contribution in this example of twenty thousand five hundred dollars and again put it into the traditional side and then immediately convert it to the roth side and for our hundred and fifty thousand dollar example we could see that we only have three thousand dollars to go so that means

We can only make a non-deductible contribution up to three thousand dollars so the maximum in this example was sixty one thousand maximum here was sixty one thousand and the maximum here was fifty thousand dollars now with if you are 50 or older you can do that additional catch-up contribution of sixty five hundred dollars which is not affected by the 415 limits so

In that case it would be possible in this example to actually contribute fifty six thousand five hundred dollars into your retirement plan and in this case it doesn’t matter in this case it doesn’t matter it would just be the additional 6500 so you would add 61 000 plus the sixty five hundred dollars that would be your maximum contribution that you can put into

This type of a plan now there’s a lot of different ways that you can mix this up you can actually make all the contributions and get all the contributions including the employer contributions over to the raw side if you want a lot of people like that raw side because they want that tax-free growth well all you would need to do is put the employee side directly

To the roth side and then immediately convert the employer match over to the roth side of course it would be taxable in the year that you’re doing that and then with the non-deductible contribution because it is already taxed you’re going to make that non-deductible contribution and then put it over to the roth 401k or 403 b side or if you have a solo 401k it’s

Basically the same thing the only thing that you have to pay attention to is whether or not your plan documents allow for this type of a strategy as a non-deductible contribution and then converting it over if it doesn’t and you can’t make this non-deductible contribution then you’re going to be limited by the 20 500 and then the employer match or profit sharing

Contributions so that is how you can get money into your 401k your 403b or your solo 401k as long as you’re a w-2 employee e so if you have any questions on this stuff let me know in the comments down below if you enjoyed this video be sure to subscribe and we’ll see on the next one

Transcribed from video

This is how much can you contribute to your retirement plan at work By Travis Sickle