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July 3, 2024 • 8 minutes
If you are self-employed (or could be), you should know about a unique retirement savings opportunity: the Solo 401k, also known as the One-Participant 401k plan or the Individual 401k. In fact, the advantages of this savings vehicle are so great, that it may be worthwhile to start your own business.
There are no age or income restrictions, beyond requiring that you have earned income, verified through tax records.
The key is that you must be a business owner with no employees, except for employees who also happen to be your spouse. (And, it may be worthwhile to hire your spouse to increase your contributions. See below.)
Total contributions to a participant’s account, including catch-up contributions for those age 50 and over, cannot exceed $76,500 for 2024. For those under 50, total contributions cannot exceed $69,000.
The massive contribution limits are what make the Solo 401k so interesting. The trick is that you can make contributions both as the employer and an employee.
NOTE: Employee contributions may be pre-tax or after-tax (Roth). There is also the option for after-tax non-Roth, but this is very rare and has limited utility. All Employer contributions are pre-tax.
In 2024, if your spouse is employed at your company, then they can contribute up to $23,000 to a solo 401(k) as an employee, or 100% of their compensation, whichever is less. This is the same amount that you can contribute as a regular employee. If the spouse is at least 50 years old, they can also do a catch-up contribution of $7,500, for a total employee contribution of $30,500.
In other words, you can contribute a lot.
And, contributions to a Solo 401k do not prevent you from also contributing to other retirement plans like an IRA. You can still contribute the maximum there too, as long as you have income enough to support it.
A Solo 401k allows you to make really big contributions to your retirement savings. And, you can even contribute to a Roth account.
Matt is ecstatic about his Solo 401k. He says, “I wish I could have created a Roth earlier, but I have always had financial constraints preventing it — i.e. earnings over a certain amount didn’t allow it, and my 401k plans didn’t offer it — or maybe some did and I never realized it. As it was, I got into 401k plans fairly late since I worked mainly for small companies. But now that I ‘retired’ with a part-time job, I discovered the idea of an Individual (solo) Roth 401k. This is almost too good to be true.”
You get all the benefits you would get from a regular 401k or IRA (or even a regular Roth IRA for employee contributions) – just supersized due to the larger contribution limits.
Depending on the type of accounts you use, tax benefits may include:
Did you know that most successful entrepreneurs started their business after 50? The knowledge you’ve gained over the years give you the skills to go it alone.
Learn more about:
1. Pro: Running your own business is rewarding.
2. Pro and Con: You need to run your own business and make adequate money to fund your life (if necessary) and the Solo 401k investment.
3. Pro: Massive contribution limits enable you to make up any lost time pretty quickly. This is great if you didn’t save as early or as much as you would have liked.
4. Pro: Many tax benefits – supersized.
5. Pro: You can make up lost time pretty quickly for what was missed in the early years, assuming you don’t actually need too much of the earnings from the self-employment to get by.
6. Pro: Roth options are possible. This is massively compelling to people who wanted to save in a Roth account because they think that tax rates will be higher in the future, but could not due to high earnings.
NOTE: You can only contribute to a Roth plan with your employee contributions, not employer.
7. Pro: Relatively simple to set up.
8. Pro: Flexible investment options.
9. Pro: With a Solo 401k you can borrow up to $50,000 or 50% of your account value — whichever is less — at a low interest rate. The loan can be used for any purpose.
10. Pro: You control the account. You do not need a “custodian” to administer the account.
11. Pro: The plans are easy to operate and don’t generally have any hidden fees.
12. Pro: Solo 401ks allow you to invest in real estate without having to pay the Unrelated Business Taxable Income (UBTI). UBTI taxes are high. Note that there are certain restrictions on the management of real estate held within the account.
There is not much bad to say about a Solo 401k.
1. Con: Some additional paperwork with the IRS after you have $250,000 in the plan.
2. Con: Running your own business can be hard.
3. Con: You can only contribute self-employement earned income.
You need an Employer Identification Number and earned income verified by the IRS, but a solo 401k is easy to open. They are offered by most online brokers.
Just imagine what extra thousands or hundreds of thousands will do to your wealth and security!
Actually, don’t imagine it, find out. Use the Boldin Retirement Planner to model possible contributions to a Solo 401k (and work income) . See the impact on your lifetime finances.
A solo 401k gives self-employed earners rare flexibility. You stack employee deferrals with employer profit-sharing, and you choose traditional or Roth solo 401k for tax timing. Then you add catch-up contributions after 50. Because fees, brackets, and healthcare interact, you model contribution levels, Roth vs pre-tax, and withdrawal sequencing in the Boldin Retirement Planner before you lock decisions.
You contribute as both employee and employer. You make elective deferrals up to annual limits, then add employer nonelective profit-sharing up to plan caps. Catch-up contributions after 50 increase room. Because limits and deductions affect brackets, test several mixes in the Boldin Retirement Planner and pick the option that preserves flexibility.
It depends on today’s bracket versus your expected retirement bracket. Roth solo 401k favors higher future taxes and long growth horizons. Pre-tax favors high current income relief. Consider IRMAA thresholds, state taxes, and future conversions. Review the nuances in Boldin’s guide to the two Roth 5-year rules, then model both paths.
Solo 401k often allows larger contributions at modest income because you add employee deferrals on top of profit-sharing. SEP IRAs rely only on employer percentages. However, plan admin and deadlines differ. Weigh fees, payroll mechanics, and future Roth conversion plans. Use the planner to see which design hits your savings target sooner.
Yes, you can roll assets to an IRA or another qualified plan when your situation changes. Hiring employees may require a different plan design. Before moving money, consider RMD timing, backdoor Roth tactics, and creditor protections. Boldin’s primer on when and how to roll over a 401k to an IRA explains key trade-offs.
RMDs begin at the statutory age unless you qualify for a still-working exception with an employer plan. Many self-employed people don’t. You can reduce future RMDs by managing pre-tax balances and considering Roth contributions or conversions. For tactics, see Boldin’s guide to minimizing RMDs, then test scenarios.
Many solo 401k providers offer a Roth sub-account. Some allow after-tax contributions and in-plan Roth conversions, enabling a “mega backdoor” strategy. However, rules and fees vary. Compare provider documents and confirm annual testing requirements. Because taxes and cash flow interact, run side-by-side cases in the planner before adopting this design.
Use primary sources for accuracy. The IRS maintains a clear overview of one-participant 401(k) plans. Review the IRS’s one-participant 401(k) plan overview for eligibility, contribution formulas, and deadlines. Then align those rules with the Savings Playbook priorities—employer match equivalents, emergency fund, tax-advantaged accounts, other investments—so your plan stays practical.
Updated September 17, 2025
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