Individual (Solo) 401k for the Self-Employed
- Projected balance (at retirement)
- 1.846.072 USD
- Investment growth
- 1.366.123 USD
A Solo (Individual) 401k is a retirement plan for self-employed people with no employees. You contribute as both employee and employer, which lets you shelter far more than a regular 401k — up to $72,000 in 2026, or $80,000 with the age-50 catch-up. As the employee you defer up to $24,500; as the business owner you add a profit-sharing contribution of up to 25% of compensation, which for a sole proprietor works out to roughly 20% of net self-employment earnings. It also combines these high limits with Roth and traditional options. One important boundary: it is only for a business with no full-time employees other than a spouse, and the $24,500 employee deferral limit is shared across every 401k you have, so a day-job plan uses up the same allowance, though you can still make separate employer contributions from self-employment income.
Published · Last verified · Written and fact-checked by Ali Raza · Our methodology · Terms explained
What is a Solo 401k?
A Solo 401k — also called an Individual 401k or one-participant 401k — is a retirement plan designed for a self-employed person with no employees other than a spouse. It works like a workplace 401k, but you play both roles: employee and employer.
That dual role is the whole point. As the employee you make elective deferrals; as the business owner you make an employer profit-sharing contribution. Combined, these let a self-employed saver contribute far more than an employee at a traditional job earning the same income.
What are the 2026 Solo 401k contribution limits?
You can defer up to $24,500 as the employee in 2026 (plus catch-ups if 50 or older). On top of that, you can add an employer profit-sharing contribution — up to 25% of compensation, which for a sole proprietor works out to roughly 20% of net self-employment earnings.
The combined total is capped at the §415(c) limit of $72,000 for 2026, or up to $80,000 with the age-50 catch-up. Only the first $360,000 of compensation counts toward the percentage-based employer piece.
| Contribution type | Limit |
|---|---|
| Employee deferral | Up to $24,500 |
| Age-50 catch-up | +$8,000 ($11,250 at 60-63) |
| Employer profit-sharing | ~20% of net SE earnings (25% of W-2 wages) |
| Combined maximum | $72,000 (plus catch-up) |
How is a Solo 401k contribution calculated?
For a sole proprietor filing Schedule C, the calculation starts from net business profit. You subtract half of your self-employment tax to get net self-employment earnings, then apply the roughly 20% employer rate to that figure and add your employee deferral.
S-corporation owners work differently: the employer contribution is 25% of their W-2 wages, not a percentage of business profit. Because the mechanics differ by business structure, a Solo 401k contribution calculator is the easiest way to estimate your specific number.
Who is eligible for a Solo 401k?
The defining rule is no employees. A Solo 401k is only for a business with no full-time common-law employees other than the owner and their spouse. Hiring an eligible employee generally means you can no longer use a Solo 401k and must move to a different plan type.
The employee deferral limit is shared across all your 401k plans. If you also have a workplace 401k at a day job, your combined employee deferrals across both cannot exceed $24,500 — though you can still make separate employer contributions from unrelated self-employment income.
- For self-employed people with no employees (a spouse may participate).
- Most Solo 401k plans allow Roth employee deferrals.
- The employee deferral limit is shared with any other 401k you have.
- A Solo 401k with over $250,000 in assets generally requires an annual Form 5500-EZ filing.
How do you set up a Solo 401k?
You open a Solo 401k through a brokerage or plan provider, many of which offer them with no setup or annual fees. You will need an Employer Identification Number for your business. The plan generally must be established by your business's tax-year-end to make contributions for that year.
One flexible feature: the employer profit-sharing contribution can often be made up to your tax-filing deadline, including extensions, giving you time to calculate the optimal amount after the year closes. As always, confirm the specifics with your provider or a tax professional — our 401k FAQ hub covers common Solo 401k setup questions.
Frequently asked
You can defer up to $24,500 as the employee, plus an employer profit-sharing contribution of roughly 20% of net self-employment earnings, up to a combined $72,000 (or $80,000 with the age-50 catch-up).