Got it, Yes, in that sense I am looking at it in reverse. And I like your way of stating the rule above.Yes.And to be clear (because maybe I am missing your point) prioritizing the SEHID does reduce (in the above example) the amount of pre-tax contributions, but my understanding that it does not reduce the amount of Roth contributions. In the above example, the sole proprietor would still be able to make a $20,500 Roth contribution.
Is that right?
I'm saying that if the $20,500 is made pre-tax it will reduce/eliminate the SEHID, and if it's made Roth it won't. But the SEHID won't change the amount of allowable pre-tax 401k contribution space, because the relationship runs the other way, with SEHID being determined by the contribution. The contribution space is still there (even for pre-tax) but you're using it for SEHID instead, which is fine.
I think we're in agreement, I'm just trying to clarify which is dependent on the other, but maybe just making it less clear.
I'm not sure this is the right answer from a tax policy POV (since it allows some double-counting), but I'll take it.
Statistics: Posted by cowdogman — Sat Jan 11, 2025 4:59 pm