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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?
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1 Answer
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