Step 1: Determine your contribution strategy
Work with your tax advisor to determine how much you can contribute, which contribution types apply to your situation (employee deferral, employer profit-sharing, or both), and when to make the deposits. Contribution limits and the deductibility of each contribution type depend on your business structure and income.
Step 2: Deposit funds into your plan account
Transfer funds from your business bank account into your Solo 401(k) plan checking account by check, wire, or ACH. Contributions should come from your business account, not a personal account, to maintain a clear link between business income and plan contributions.
Step 3: Record the contribution
Log each deposit in the 401(k) Contribution Log included with your Self-Directed Plans plan documents. Record the date, amount, contribution type, and participant account. This log supports your tax deductions, maintains accurate participant account balances, and provides the data needed for Form 5500-EZ if your plan is required to file.