What is a Solo 401(k)?
A Solo 401(k) — also called a self-employed 401(k) or one-participant 401(k) — is a retirement plan for a business with no full-time employees other than the owner (and the owner's spouse, if they work in the business). It lets you contribute in two roles: as the employee, deferring part of your own pay, and as the employer, making a profit-sharing contribution on top. That combination is what gives it a much higher ceiling than a SEP IRA or traditional IRA at the same income level.
Who qualifies
You need self-employment income and no full-time employees (other than a spouse). This calculator is built specifically for sole proprietors and single-member LLCs filing a Schedule C. If your business is taxed as an S-corp, your contribution is based on W-2 wages instead of net profit, and the formula is different — a calculator for that case is coming soon.
Contribution deadlines
The plan itself has to be opened by December 31 of the tax year. Once it's open, you generally have until your tax filing deadline — including extensions — to actually fund both the employee deferral and the employer contribution for that year. If you're filing an extension, that can push your funding deadline as late as mid-October.
Common questions
What if my net profit is negative or very small?
You need positive net self-employment earnings to contribute anything. With a very small profit, the self-employment tax adjustment can leave little room — the calculator will flag this for you.
Can my spouse also contribute?
If your spouse works in the business and earns their own compensation from it, they can open their own Solo 401(k) and contribute under their own limits — effectively doubling what a household can put away. This calculator handles one person at a time.
Solo 401(k) vs. SEP IRA — which is better?
At lower income levels, a Solo 401(k) usually wins because the employee deferral lets you contribute more with less profit than a SEP IRA needs. SEP IRAs only allow the employer-side contribution, so you'd need roughly $288,000 in net profit to hit the same total a Solo 401(k) reaches with much less income.
Is this a Roth or traditional contribution?
Either can work — most Solo 401(k) providers let you choose traditional (pre-tax) or Roth (after-tax) for the employee deferral, though not every provider offers a Roth option for the employer contribution. Note the SECURE 2.0 Roth catch-up rule referenced above if you're 50 or older.
More in this suite
See your self-employment tax before you plan contributions, compare a SEP IRA vs. Solo 401(k) at your income level, or see your true take-home pay after tax and retirement savings.