Solo 401(k)s Explained
Discover the power of Solo 401(k)s - retirement savings plans designed for self-employed individuals and small business owners with no employees other than a spouse.
Solo 401(k)s, also known as Individual 401(k)s or Self-Employed 401(k)s, are retirement savings plans designed for self-employed individuals or small business owners with no employees other than a spouse. They offer unique advantages and flexibility for building retirement wealth.
Key Features
Solo Participation
No W2 employees (You may W2 your spouse). Perfect for sole proprietors, freelancers, and small business owners.
Ideal For:
- Sole proprietors
- Freelancers and consultants
- Small business owners
- Independent contractors
Higher Contribution Limits
Employer + Employee contributions for higher limits than traditional IRAs. Maximize your retirement savings potential.
2025 Contribution Limits:
Diverse Investment Options
Real Estate, Stocks, bonds, mutual funds, and more. Enjoy the same investment flexibility as other retirement accounts.
Investment Options Include:
- Real estate
- Stocks and bonds
- Mutual funds
- Precious metals
- Private equity
- And much more
Loan Option
Borrow up to 50% (up to $50,000) from your Solo 401(k) account with flexible repayment terms.
Loan Details:
- Borrow up to $50,000 or 50% of vested balance (whichever is less)
- Repayment: Typically 5 years (longer for home purchase)
- Interest paid back into your own 401(k) account
- Reasonable, flexible interest rates
Roth Option
After-tax contributions with tax-free withdrawals in retirement if qualified. Provides tax diversification.
Roth Benefits:
- Contributions made with after-tax dollars
- Qualified withdrawals are tax-free
- Tax diversification strategy
- No required minimum distributions during your lifetime
Administrative Responsibilities
IRS compliance and reporting required yearly. Proper record-keeping and annual filings are essential.
Annual Requirements:
- Form 5500-EZ filing (if assets exceed $250,000)
- Maintain detailed records
- Ensure IRS compliance
- Annual plan reviews
Catch-Up Contributions
Standard Catch-Up (Ages 50-59 & 64+)
Additional catch-up contributions allowed in 2025
For individuals aged 50 to 59 AND 64 or older, additional catch-up contributions help maximize retirement savings.
Enhanced Catch-Up (Ages 60-63)
Enhanced catch-up contributions allowed in 2025
For individuals aged 60-63, enhanced catch-up contributions provide even greater savings opportunities under the SECURE 2.0 Act provisions.
Complete Control Over Your Investments
Checkbook Control
Our plans allow direct investment control via a special-purpose trust, giving you the flexibility to invest when and how you want.
Broad Investment Options
Includes Real Estate, stocks, bonds, mutual funds, private equity, and more. The possibilities are nearly endless.
Important: Prohibited Transactions Awareness
Participants must avoid IRS-prohibited transactions to maintain tax advantages. Understanding these rules is crucial for maintaining your plan's qualified status.
Tax Benefits
Tax-Deductible Contributions
Reduce your current year taxable income with pre-tax contributions.
Tax-Free Growth
Earnings grow tax-deferred until you begin taking distributions.
Roth Sub-Account Option
Tax-free withdrawals in retirement if qualified.
Flexibility in Contributions
Adjust Based on Income
Contribute more in profitable years, less in lean years.
No Mandatory Contributions
No required annual contributions - contribute when you can.
Tax Diversification
Combine pre-tax and Roth contributions for flexibility.
Eligibility
Solo 401(k)s are ideal for:
- Sole proprietors, freelancers, and small business owners with no full-time employees (other than a spouse)
- Various business structures, including sole proprietorships, partnerships, LLCs, and corporations
- Independent contractors and consultants
- Anyone with self-employment income and no employees
Important Considerations
Key Requirements:
- Ensure eligibility criteria are met—no full-time employees other than a spouse
- Stay compliant with IRS regulations and filing requirements
- File Form 5500-EZ when required
Professional Guidance:
- Seek guidance from financial advisors or tax professionals
- Optimize your plan for maximum benefits
- Ensure compliance and avoid penalties
Ready to Set Up Your Solo 401(k)?
Our team of retirement planning experts can help you establish and optimize your Solo 401(k) plan, ensuring compliance while maximizing your retirement savings potential.