Qualifying
What is a solo 401(k)?
A solo 401(k) — also called an individual 401(k) or one-participant 401(k) — is a full 401(k) plan for self-employed individuals with no employees. It allows both employee and employer contributions, giving you a combined limit of up to $69,000 for 2024.
The full picture
A solo 401(k) — formally called a one-participant 401(k) by the IRS — is a standard 401(k) plan that covers a business owner with no employees, or a business owner and their spouse. It carries the same contribution limits as a regular workplace 401(k) but adds an *employer* contribution on top, making it one of the highest-ceiling retirement vehicles available to self-employed people.
How solo 401(k) contributions work
You wear two hats: employee and employer. As the employee, you can defer up to $23,000 in 2024 ($30,500 if you're 50 or older — catch-up contributions apply). As the employer, you can contribute up to 25% of compensation on top of that. Combined, the total limit is $69,000 for 2024 ($76,500 with catch-up). Self-employed income calculations follow the same IRS formula used for SEP-IRAs. Full details are in the IRS one-participant 401(k) guidance.
Solo 401(k) vs. SEP-IRA: which one wins?
Both have the same $69,000 ceiling, but the solo 401(k) wins at lower income levels because the employee-side contribution is a flat dollar amount, not a percentage. For example, a freelancer earning $50,000 can max out the $23,000 employee deferral in a solo 401(k) far more easily than contributing 25% of $50,000 ($12,500) to a SEP-IRA. The solo 401(k) also allows a Roth option (after-tax contributions) if your plan document allows it — the SEP-IRA does not.
Key rules and filing requirements
Solo 401(k)s are only available when you have no common-law employees (other than a spouse). Once your plan assets exceed $250,000, you must file IRS Form 5500-EZ annually. Contributions must be made by your tax-filing deadline, including extensions, but the plan itself must be established by December 31 of the year for which you want to contribute.
- 2024 employee deferral limit: $23,000 ($30,500 if age 50+).
- 2024 employer contribution: up to 25% of compensation.
- Combined 2024 limit: $69,000 ($76,500 with catch-up).
- Roth contribution option available if your plan document includes it.
- Only available if you have no employees other than a spouse.
What the IRS says
- A one-participant 401(k) plan is sometimes called a solo 401(k), individual 401(k), or self-employed 401(k). It covers a business owner with no employees, or a business owner and their spouse. — IRS
- For 2024, the total contributions to a solo 401(k) cannot exceed $69,000 ($76,500 including catch-up contributions for those age 50 or older). — IRS
- A one-participant 401(k) plan must file Form 5500-EZ once plan assets exceed $250,000 at the end of the plan year. — IRS
Key takeaways
- A solo 401(k) lets self-employed individuals make both employee and employer contributions — the highest combined ceiling of common self-employed plans.
- The Roth option (after-tax contributions) is available in many solo 401(k) plans; SEP-IRAs don't offer this.
- Only eligible if you have no common-law employees other than a spouse.
- The plan must be set up by December 31, even if contributions aren't due until your filing deadline.
- Compare with a SEP-IRA: solo 401(k) is often more advantageous at income below ~$200,000 because of the flat employee deferral.
Published 2026-05-22 · Updated 2026-05-22 · https://clearvaluelending.com/answers/what-is-a-solo-401k