Company Driver vs. Owner-Operator: Only One Can Legally Hide $72,000 a Year From the IRS. Guess Which
Owner-operators can legally shelter up to $72,000 annually in Solo 401(k) contributions—employee deferral plus employer profit-sharing—while company drivers are capped at about $30,000. The higher limit applies only when net profit exceeds six figures, as employer contributions are based on net earnings. Owner-operators also pay the full 15.3% self-employment tax to cover both Social Security and Medicare.
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The $72k Solo 401(k) shelter presumes net profit ≥$100k and ignores that 15.3% SE tax is levied *after* that shelter, so the real threshold for meaningful deferral is closer to $120k net—owner-operators paying >$18k in extra tax to defer.
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