What is a Solo 401(k) Plan?

A Solo 401(k) plan is a 401(k) plan for a self-employed individual, partnership, or a business owner with no employees.  In general, a spouse who is an owner or employee of the plan sponsor may also participate.

What are some advantages?

  • Same contribution limit as a full 401(k) plan – For 2016, contributions of up to $53,000 or up to $58,000 if over age 50.
  • Flexible Annual Contributions – Solo 401(k) employer contributions can be increased, decreased or stopped from one year to the next without cost or penalty.
  • Tax Deductible Contributions – Whether incorporated or not, most or all contributions can be deducted either from personal income or as a business expense.
  • Investment Choice – You choose the vehicle, typically brokerage accounts, so you can manage your client’s portfolio within the products you sell.
  • Loans feature – Tax free loans are permitted of up to 1/2 of the total value of the Solo 401k up to a maximum of $50,000. Loans are not available in most other retirement vehicle options such as IRAs, SEPs, etc.
  • Roth feature – Solo 401(k) plans can be designed with a Roth contribution component allowing after tax contributions and tax free distributions after age 59 ½.


What is the deadline to set-up a Solo 401(k)?

The deadline is the end of the plan sponsor’s tax year, typically 12/31.