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Retirement plan for sole proprietor
I work for the federal government and I’m maxed out in my TSP retirement plan now. I have my business on the side. Can I contribute to a retirement plan for my small business in addition to what I contribute to my TSP? Or is it capped?
Answer
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan (TSP) is $19,500 for 2020. This limit would be met in 2020 if you solely contributed $19,500 to the federal government’s Thrift Savings Plan, and one would not be able to contribute any more dollars towards a 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan. If you are 50 or over, there is a “catch-up” contribution which is limited to $6,500 for 2020. So, in previous years, if you did not contribute the maximum annual limit for the federal government’s Thrift Savings Plan, you could contribute an additional $6,500 for 2020 to “catch-up”.
In addition to the contributions noted above, you could also contribute to a Roth IRA. Your contributions to a TSP won’t affect your ability to contribute to a Roth IRA, but that doesn’t mean you’re eligible. To contribute to a Roth IRA, your modified adjusted gross income must not exceed the limits for your tax filing status. If it does, you can’t contribute.
https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500