Q: I have a full-time job with a 401(k) and also do some freelance work in the evenings. If I contribute the maximum to my employer's 401(k), can I also contribute to a self-employed retirement plan, such as a SEP or solo 401(k)?
A: You can contribute income from a full-time job to your employer's 401(k) and contribute freelance income to a solo 401(k) or Simplified Employee Pension.
Your contributions to your employer's 401(k) can affect your solo 401(k) limits. Self-employed people who don't have an employer 401(k) can contribute up to $19,000 ($25,000 if 50 or older) plus 20 percent of net self-employment income, for a total of $56,000 in 2019 ($62,000 if you make catch-up contributions).
If you also contribute to a 401(k) at your full-time job, the amount you can put in the solo 401(k) is reduced by contributions made to the employer 401(k). But that only affects the first $19,000 of contributions ($25,000 if 50 or older), not the 20 percent of business income.
Employer 401(k) contributions don't affect SEP contribution limits. You can contribute 20 percent of your net self-employment income, up to $56,000 (with no catch-up contributions).
Q: Although I'm retired, I did earn a few thousand dollars in 2018 by doing a few consulting projects and working as an usher at a local theater. Can I contribute to an IRA? Can I qualify for the retirement savers' tax credit?
A: As long as you are under age 70½ and have some earned income, you can contribute to a traditional IRA. You can contribute up to the amount of the income you earned by working for the year, with a maximum of $7,000 for 2019 if you're 50 or older.
You can contribute to a Roth IRA at any age, but your adjusted gross income for 2019 must have been less than $137,000 if single or $203,000 if married filing jointly.
You may qualify for the retirement savers' credit, depending on your income and the amount of your retirement-savings plan contributions for the year. The maximum credit is $1,000 per person, which you can get if you contributed $2,000 or more to your IRA and your income is $32,000 or less if single or $64,000 or less for joint filers.
Your credit could be reduced if you recently withdrew money from an IRA or 401(k). For more information, see the instructions for IRS Form 8880 at IRS.gov.