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I am currently working as a W2 contractor, with no access to a 401(k) plan through the contracting agency. However, I do own an LLC, with, unfortunately, negligible revenue earnings. Here are my questions:

  1. Could I use the LLC to set up and contribute to a retirement plan?
  2. Is there any restriction on using only the (negligible) income earned by the LLC towards the retirement plan contribution, or can I use my W2 contractor income to contribute into that account as well? Especially since the taxes for the LLC are filed along with my personal taxes.
  3. Finally, if possible, would such a situation warrant a specific retirement plan, or would a basic SEP-IRA or 401(K) with my financial institution suffice?

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401k plans are run by an employer, including as a special case, a self-employed person. While the LLC can set up a 401k plan, its employees can only contribute the smaller of what the IRS allows and the total compensation from the LLC. In short, your W-2 wages cannot used to contribute to the LLC 401k plan; you are limited to what the LLC pays you.

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