What is a solo 401(k)?

A solo 401 (k) is an individual 401 (k) designed for a business owner with no employees. In fact, IRS rules say you can’t contribute to a solo 401 (k) if you have full-time employees, though you can use the plan to cover both you and your spouse. Just want the need-to-know basics about this retirement account? Here’s the breakdown:

How much can a solo 401(k) contribute?

With the solo 401 (k) you can go above the usual limits of a 401 (k). While you may contribute to multiple 401 (k) accounts, your total employee contribution to all types of 401 (k)s may not exceed the annual maximum contribution, that is, $23,000 in 2024.

What is the difference between a solo 401(k) and a self-employed retirement plan?

One key difference between the solo 401 (k) and other self-employed retirement plans is that employees can contribute all of their salary up to the annual maximum contribution. They’re not limited to 25 percent of their salary, as in some other plans.