I wish it were a simple answer, but it is not.  This is the best explanation I have found

https://bcmadvisors.com/solo-401k-limits-sole-proprietor/

good luck

Thank you Rustler,

I had seen that post previously. It is about how to calculate your contribution and I think I understand that.  My question is how to record it properly in QuickBooks.  I guess what I'm asking is if any of the expense is a deductible business expense or if it is all owners equity.  I would like a CPA or someone with knowledge of accounting for solo Solo 401Ks to comment.

Awesome. Thank you so much. I did read on one of the IRS publications that Solo 401K contributions go on the 1040 rather than the schedule C, so that makes sense.

Hi, if I may come in and ask an extra question: 

What kind of Equity account should I use? 

When I add a new Equity account to my Chart of Accounts, none of the options on the dropdown seem to be the perfect one. 

Thank you

There are 4 types of contributions you can make to Solo 401k:  employee elective deferral, elective deferral catch up (50+), employee after tax, and Employer discretionary (ie profit sharing/match).

The first 3 above that say employee come out of your draws.  I recommend creating a sub account to track the type and amount of employee contributions. There are IRS limits and rules for each.

The Employer discretionary (if your plan allows it) is a company expense.  Recommend creating an Expense account "PSP Contributions" or similar. Employer Discretionay/Profit sharing expense is limited to 25% of your total draws for the year, up to the IRS max.

Have you figured it out?

Following the above, I'm going to create an Expense account "PSP Contributions".  But I think I need to use it in combination with a liability account because I want to accrue the amount based on 25% of my compensation, up to the IRS Max. Now that we're in November 2024, I know what my total amount will be.   But I won't be able to fully fund it due to cash flow until Q1 of 2025.  I already made a partial contribution.  So I think there's going to be some Journal Entry gymnastics I need to do.  Guidance appreciated.

I feel like I am in the same mess.  I have a single member LLC so taxed as sole prop with a schedule C.  the only member (not an employee so no w2 or paychecks) contributed the max to the 401k in December and we did the safe harbor match but I am unsure how to record this in quickbooks. 

The member contribution to 401k.....business expense or equity?

the LLC match to 401k....business expense or equity?

Thanks

I have been working with a CPA.  And I can't say I entirely understand all of it.  But in order to get my end-of-year contribution to show on my balance sheet, he had me create an Other Current Liability account called Accrued Retirement Contribution.  Before the end of last year, I posted my planned contribution to that account.  Before March 15, 2025, I will be writing checks to that account.  Not entirely sure what that's going to look like.  I'll update this when I know.