Solo 401(k) Plan
Solo 401(k) plans are designed for self-employed individuals or business owners with no employees. It allows higher contributions compared to IRAs, with tax-deferred growth, offering flexibility in retirement savings.
The Solo 401(k) is ideal for small business owners, freelancers, or independent contractors. It has the same tax benefits as a standard 401(k) but tailored to individuals without employees. The plan allows both employer and employee contributions, significantly increasing the contribution limit compared to a regular IRA. In 2024, total contributions can reach $66,000, with an additional $7,500 catch-up contribution for those aged 50 and older.
Self-employed individuals can make both employee deferrals (up to $23,000) and profit-sharing contributions (up to 25% of compensation), offering a powerful retirement savings tool. Contributions can grow tax-deferred until withdrawn, or after-tax in a Roth Solo 401(k). There are also loan provisions, allowing the individual to borrow from their plan. The Solo 401(k) is flexible, offering diverse investment options and high contribution limits.