COLLECTED WISDOM™ on Solo 401k Retirement Plans

The self-employed used to say that 401k plans weren't in tune with their needs-but thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), they're now singing their praises. While EGTRRA did not explicitly create a new type of retirement plan, it made a number of constructive changes to existing laws governing 401k plans. In doing so, the legislation had an unintended benefit -- one that caters to the distinctive needs of small businesses where the owner or owners are the only employees -- increased contribution limits.

Here is information to help you understand and pursue a Solo 401k plan.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

Solo 401k Plans Eligible for Up to $1,500 in Tax Credits

SECURE 2.0 auto-enrollment tax credit provides a "substantial incentive" for self-employed individuals to open Solo 401ks. The auto-enrollment tax credit also provides substantial incentives even when upgrading an existing plan.

Source: 401kspecialistmag.com, December 2023

The Solo 401k Death Trap

This article explains the latest so-called easy solution, the Solo(k) plan. However, it also reminds plan administrators that things can change, and a Solo(k) may cease to be the easy solution it is thought to be.

Source: Ferenczylaw.com, May 2023

Establishing a Solo 401k Under the New Rules

For self-employed individuals and their tax advisors, there are several special considerations concerning setting up and contributing to solo 401k plans, including, but not limited to, the deadline for establishing a 401k plan, the deadline for making a salary deferral election, and the owner's compensation for contribution purposes.

Source: Tra401k.com, November 2021

IRS Lists Solo 401k Plans as Audit Target

If your business sponsors a "solo 401k" plan, it may be in the crosshairs of the Internal Revenue Service. The Service's TE/GE division has identified one-participant 401k plans as among its current audit initiatives. In its web posting announcing the initiative, TE/GE states: "[t]he focus of this strategy is to review one-participant 401k plans to determine if there are operational or qualification failures, income and excise tax adjustments, or plan document violations."

Source: Eforerisa.com, April 2021

The Solo 401k: A Retirement Plan for the Self-Employed Person

The Solo 401k is designed to solve a very particular problem. What if you work for yourself instead of for another employer? How can you start saving for retirement responsibly and in a tax-advantageous way? This retirement plan allows self-employed people and solopreneurs to have a retirement account so they can build tax-advantaged savings and sleep easier at night. This article delves into what a solo 401k is, who is eligible to participate in it, and how it differs from a traditional 401k plan.

Source: Investmentu.com, December 2020

What Is a Solo 401k?

If you're self-employed and looking to save for retirement -- or just get an excellent tax break -- you need to have a look at the solo 401k. It might be the best retirement option for one-person businesses, because of how quickly you can amass money in the plan. Here's what you need to know about the solo 401k.

Source: Bankrate.com, May 2020

Is a Solo 401k Right for You? Rules and Benefits in 2020

Like any investment plan, a solo 401k can be beneficial when setting up your nest egg according to your design. Before jumping into any big financial choices, let's look at the rules and benefits that come with opening a solo 401k in 2020 to see if it's the right choice for you.

Source: Forbes.com, February 2020

Is a Solo 401k Right for You?

You probably won't miss much when you say goodbye to your traditional 9-to-5, but one of the things that you might regret leaving behind is your 401k. You could struggle to save enough for your future if all you have is an IRA. But there is another option: a solo 401k. These accounts are similar to traditional 401ks, but they're specifically designed for self-employed workers with no employees.

Source: Fool.com, January 2020

How to Maximize Roth Savings Through a Solo 401k

There are two kinds of contributions a person can now make to a Solo 401k plan, one as "employer" and one as "employee." Since they are self-employed, they are the contributor either way, but different limits and rules apply to the two types of contributions.

Source: Morningstar.com, July 2019

What Is a Solo 401k and How Much Can You Contribute?

A solo 401k plan can be an excellent retirement plan option for those who are self-employed. They are easy to open and fund, and the contribution limits are high. Here are some details about these plans.

Source: Thestreet.com, July 2019

The Solo 401k Should Make Us All Join the Gig Economy

The "gig economy" has transformed the way millions of Americans are working and earning a living today. The percentage of the American workforce who are small business owners, self-employed, or partially self-employed in the gig economy is significant and is growing as forces such as the Affordable Care Act make working independently more possible. For people who fit this bill or think they might with a career change, a Solo 401k is a good retirement wealth-building tool.

Source: Forbes.com, June 2019

What Is a Solo 401k Plan?

Actually, there is no such thing as a "solo 401k" plan. You won't find it in the Internal Revenue Code. Solo 401k is a marketing term that some plan providers, like financial institutions and recordkeepers, have created to explain what is really a tax qualified 401k plan that meets the IRS definition of a "one-participant plan."

Source: Consultrms.com, February 2018

Choosing Individual 401k Plans: All That Glitters Is Not Gold

Individual 401k plans or Solo 401k plans have gained popularity over the last couple years, especially among owner-only businesses and self-employed professionals. Did you ever wonder why some institutions offer Solo 401k plans free of cost whilst others charge a fee?

Source: 401khelpcenter.com, January 2017

Shelter Additional $1,000 With New Solo 401k Contribution Limits

The solo 401k contribution limits for 2017 have increased. Author shows how an extra $1,000 can make an important difference in your retirement account balance over time.

Source: 401khelpcenter.com, November 2016

How to Maximize Your Tax Savings With a Solo 401k

When used efficiently, a Solo 401k could help you increase your retirement savings by up to ten times of the regular IRA contributions.

Source: 401khelpcenter.com, October 2016

Going Solo 401k

Self-employment isn't for everyone, including knowing your retirement plan options. When considering your options solo 401k plan might be for you. Here is an overview.

Source: Tristarpension.com, October 2016

Solo 401k is a Retirement Plan Alternative for the Self-Employed

A TD Ameritrade survey revealed that 28% of the self-employed professionals do not save anything at all for retirement, even though there are several available retirement plans for the them. One solution is the 'solo 401k.' Article provides a good basic overview of this type of plan.

Source: 401khelpcenter.com, March 2016

How Much to Contribute to Your Solo 401k in 2016

How much you should save for retirement can depend on many factors, such as your current savings, any debt, your income, and your retirement goals. The more you can afford to save, the faster you will reach your retirement goals.

Source: 401khelpcenter.com, November 2015

Save On Taxes This Year With a Solo 401k for Small Businesses

Tax planning is an important process for most of us, but even more so for small business owners and self-employed professionals. One of the popular strategies for small business owners is the Solo 401k plan.

Source: 401khelpcenter.com, September 2015

Solo 401k Plan Owners Need to Be Aware of Three Important Events

As the plan trustee of a Solo 401k, you are responsible to keep the plan in compliance with the IRS regulations. Usually, the task of a Solo 401k plan trustee can be quite simple. However, as the plan owner, you will need to stay on top of three events.

Source: 401khelpcenter.com, April 2015

Loans From Solo 401k Plans Holding Steady

Even as the economy improves, the pace of loans taken from Solo 401k plans is holding steady.

Source: Benefitspro.com, March 2015

Maximum Amount a Self-Employed Person Can Contribute to an Owner-Only 401k Plan

Answer to the question, "What is the maximum contribution my client, who is self-employed and unincorporated, can make to his owner-only 401k plan for 2013?"

Source: Napa-net.org, August 2013

Solo 401k a Great Tool for Self-Employed

If you are a freelancer, consultant or other self-employed person, the government offers a $50,000 tax break that could help secure your retirement. The solo 401k -- also known as the individual 401k -- was created by the Economic Growth and Tax Relief Reconciliation Act of 2001. For the 2012 tax year, it allows businesses with only one full-time employee-owner to contribute up to $50,000 to the plan ($55,500 for those 50 and older).

Source: Bankrate.com, September 2012

Self-Directed Retirement Options: SEP IRA v. Solo 401k

At first glance, the two platforms -- the SEP IRA and Solo 401k -- appear very similar, but on a closer look, the Solo 401k actually has a number of distinct advantages.

Source: Nuwireinvestor.com, June 2012

Solo 401k Contributions

If you have a home business, one way you can lower your taxable income for the year is to open a solo 401k and make a contribution.

Source: Personaldividends.com, December 2010.

Consider a Solo 401k

One of the major issues facing the self-employed is how to save for their retirement. If you work for a company you likely have a 401k plan or other retirement savings vehicle available to you. If you are a self-employed you will need to establish your own retirement savings program. One option to consider is the Solo 401k.

Source: Chicago Financial Planner, September 2010.

Launch a Solo 401k for Small-Business Clients

Many small-business clients run their operation as a one-person show. Once the business has turned the corner, the owner can focus on setting aside more funds for retirement. And the more he or she can save each year, the merrier the client will be. Strategy: Point out the benefits of a solo 401k plan.

Source: Accountingweb.com, June 2010.

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