What Is a Solo 401k?
A Solo 401k (also called Individual 401k or Self-Employed 401k) is a qualified retirement plan for self-employed individuals with no full-time employees other than a spouse. You act as both employee and employer, contributing in both capacities up to the $69,000 combined limit in 2025.
Solo 401k contribution limits for 2025
| Contribution Type | 2025 Limit | Who It Applies To |
|---|---|---|
| Employee deferral | $23,500 ($31,000 if 50+) | Self-employed individual |
| Employer profit-sharing | Up to 25% of net self-employment income | As employer |
| Combined maximum | $69,000 ($76,500 if 50+) | Total of both components |
A self-employed person earning $120,000 net can contribute up to $53,500 to a Solo 401k in 2025 ($23,500 employee + $30,000 employer at 25% of compensation). A W-2 employee with the same income can contribute at most $23,500. The self-employed person can shelter 2.27× more money from taxes.
Solo 401k vs. SEP-IRA vs. SIMPLE IRA
Self-employed retirement plan comparison 2025
| Plan | 2025 Limit | Roth Option | Loan Option | Best For |
|---|---|---|---|---|
| Solo 401k | $69,000 | Yes (Roth 401k) | Yes | Most self-employed — highest limits |
| SEP-IRA | 25% net income up to $69K | No | No | Simplicity; lower contribution admin |
| SIMPLE IRA | $16,500 + employer match | No | No | Small businesses with employees |
| Traditional IRA | $7,000 | Yes | No | Supplement only; low limit |
How to Set Up a Solo 401k
- Get an EIN (Employer Identification Number) from IRS.gov if you don’t have one (free, takes 10 minutes)
- Open a Solo 401k at Fidelity, Vanguard, Schwab, or TD Ameritrade (all free, no custodian fees)
- Sign the plan adoption agreement and designation forms
- Contribute employee deferral by December 31 of the tax year
- Make employer contribution by your tax filing deadline (including extensions)
- Report contributions on Schedule 1 (Form 1040) — no separate tax form needed below $250,000 balance
Solo 401k Tax Savings by Income Level
Solo 401k maximum contributions and tax savings by self-employment income
| Net Self-Employment Income | Max Contribution | Tax Savings (24% bracket) | Effective Take-Home Cost |
|---|---|---|---|
| $60,000 | $33,500 | $8,040 | $25,460 |
| $80,000 | $43,500 | $10,440 | $33,060 |
| $100,000 | $48,500 | $11,640 | $36,860 |
| $150,000 | $61,000 | $14,640 | $46,360 |
Project Your Solo 401k Wealth
Enter your self-employment income and contribution amount — see your 25-year retirement projection.