What is an irs 402g?

Solos and SEPs have the same “employer” contribution limits. If you are self employed there is a formula to use to calculate the contribution but in the end the limit is 25% of your income. But wait, what makes the Solo better? In addition to the employer contribution the participant of the plan can also defer income which will increase the amount that can be put into the Solo. The IRS has a limit which is called the 402g limit and it works like this: If you are under the age of 50 you can defer any amount you want up to $14,000. If you are 50 or older you are allowed to defer the $14,000 plus an additional “Catch-up” contribution of $4,000 for a total of $17,000. The SEP does not allow you to defer income.