Retirement planning often gets pushed aside when you work for yourself. You are focused on keeping your business running, finding clients, and managing unpredictable income. But saving for retirement early helps create long term stability and gives you more control over your financial future.
If you are self-employed, one of the most effective retirement tools available is the Solo 401k. It combines high contribution limits, tax advantages, and investment flexibility. With the right provider, setting one up is simpler than many people expect.
This guide walks you through what a Solo 401k is, who qualified for one, how much you can save, and how to compare plans so you choose the right fit.
Quick Takeaways:
What is a Solo 401k?
A Solo 401k is a retirement plan for self-employed individuals with no full time employees other than a spouse. It allows both employee and employer contributions.
Who qualifies?
Anyone with self-employment income and no full time employees besides a spouse.
How much can I contribute?
For 2025, you can contribute up to $23,000 as an employee and up to a combined total of $69,000 with employer contributions. Those age 50 and older can contribute up to $76,500.
How do I open a Solo 401k?
To open a Solo 401k, choose a provider, complete the required plan documents, establish your Solo 401k account, and fund it through the plan’s dedicated checking account.
Why Retirement Planning Matters for the Self Employed
Self-employed workers must create their own retirement path since there is no employer sponsored plan waiting for them. Without structure, it is easy for retirement savings to slip through the cracks.
A Solo 401k provides a built-in framework for long term saving. It also offers tax advantages that may reduce your taxable income today while helping you build wealth for tomorrow.
IRAR Trust is known for responsive support and simple setup for self-directed retirement accounts, which helps make the process more approachable.
What Is a Solo 401k
A Solo 401k is a retirement plan designed specifically for a one-person business. It functions like an employer 401k but gives you full control over contributions and investments. This structure increases total annual savings and provides strong tax benefits.
Investment Options:
Depending on your provider, you may invest in:
- Stocks and mutual funds
- Real estate
- Private notes
- Precious metals
- Other alternative assets
Learn more about self-directed accounts
Who Is a Solo 401k For
You may qualify for a Solo 401k if you:
- Earn self-employment income
- Have no full-time employees other than a spouse
This includes freelancers, consultants, independent contractors, sole proprietors, and single member LLC owners. If your spouse works in the business, they may also contribute.
If you want to explore other retirement account types, visit our Self-Directed IRA Guide
Contribution Limits for 2025
High contribution limits are one of the biggest advantages of a Solo 401k. They allow you to save more in strong income years and take advantage of tax benefits.
Employee Contributions As of 2025, you can contribute:
- $23,000 as an employee
- $30,500 if age 50 or older (includes $7,500 catch up contribution)
Employee contributions can be traditional tax deferred or Roth.
Employer Contributions Your business can contribute:
- Up to 20% of net self-employment income for sole proprietors and single member LLCs
- Up to 25% of W2 wages for S Corporation owners
These contributions are tax deductible for the business.
Total Contribution Limit for 2025
Your combined employee and employer contributions can reach:
- $69,000 for those under age 50
- $76,500 for those age 50 and older
These contributions are applied to your 2025 tax year and are typically deducted when you file in 2026.
How to Start a Solo 401k
A Solo 401k is simple to start when you work with a supportive provider.
Steps to Open a Solo 401k
- Confirm that you qualify.
- Compare Solo 401k providers.
- Complete a new account application.
- Fund the account through the plan’s dedicated checking account.
- Make contributions before your tax deadlines.
How to Compare Solo 401k Providers
Solo 401k providers vary in fees, features, investment options, and support. Consider the following when comparing plans:
- Setup fees
- Annual and monthly fees
- Investment flexibility
- Transaction fees
- Roth and loan options
- Customer support
- IRS Plan update cost
- Tax filing cost
Some providers offer only market-based investments. Others, including self-directed Solo 401k providers, allow alternative assets like real estate and private lending.
IRAR Trust offers all-inclusive pricing, no hidden fees, and flexible investment options for self-directed Solo 401k plans.
Download our Solo 401k Provider Comparison Guide.
Why a Solo 401k Works Long Term
A Solo 401k is a strong retirement choice because it grows with you.
Higher Savings Potential
Employee deferrals plus employer contributions create one of the highest contribution limits available to self-employed individuals.
More Flexibility
Unlike a SEP IRA or traditional IRA, a Solo 401k supports Roth contributions and may offer loan features depending on the provider.
Built for Business Growth
As your income increases, your contribution potential increases. If your spouse works in the business, household savings can increase even more.
Explore investment possibilities here
What You Can Do Today
You do not need to complete your entire retirement plan at once. A simple step today can move you in the right direction.
- Confirm your eligibility
- Compare providers
- Open your Solo 401k account
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