There are two types of contributions you can make to your solo or individual 401k: employee and employer. Employer contributions are also sometimes referred to as profit sharing.
Employee contribution: this amount is deducted from your wages. For 2025, the max amount is $23,500 per employee. If you are 50-59 or 64 & older, you can contribute an additional $7,500, for a total of $31,000. If you are between 60-63, there's an additional catch-up for a total of $34,750.
Employee contributions must be made before the end of the calendar year. Your contribution will be reported on your paystub and W-2.
Employer contribution: this is the amount your business contributes to your 401k. As an s-corp, the amount equals 25% of your gross wages (before deductions like your employee contribution).
This contribution can be made any time before your business tax return is filed. Your contribution is recorded as a business expense and will be shown on your 1120S business tax return.
Additional information to keep in mind:
- The total contribution limit for 2025 (employee and employer amounts combined) is $70,000. If you are 50-59 or 64 & older, the max combined contribution amount is $77,500. For those 60-63 the total is $81,250.
- Both types of contributions should come from your business bank account.
- If you are making regular employee contributions to your 401(k), but don't see it reported on your paystubs, submit a payroll ticket and your team will make sure it is recorded properly! For more info on how to request changes to payroll, click here.
- To make sure Formations has the correct info, upload the contribution confirmations. Make sure it shows the amount, the plan year, and the date of the contribution.