GREAT MONEY LESSONS. YOUR NEXT STEP.
Solo 401(k), explained simply—plus Solo 401(k) vs SEP IRA
A Solo 401(k) is a retirement account for a business with no full-time employees except you (and your spouse). You can save two ways: as the worker and as the business.
START HERE · ONE SMALL MOVE
Write down what your business pays you this year: salary if you run an , or net profit if you are a sole owner. Both accounts start from that number.
Completely free. No card, no trial, no bank login.
GREAT MONEY IDEAS. EVERYDAY WORDS.
Pay your future self like a bill.
Business owners have no boss offering a plan. You get to build your own—and it can hold far more than a regular IRA.
Get any free match first. Then fill tax-friendly accounts.
In their order, saving more for retirement comes after a cash cushion and costly debt. For owners, the business can play the role of the match.
ONE SMALL MOVE
Before maxing a , check that your home cushion and business cushion are started.
LESSON → REAL LIFE
Your simple solo 401(k) plan
Try one step at a time. Check it off when you’ve done it.
A starting guide, not a plan based on your finances. Checkmarks stay only while this page is open.
1. Check you qualify
A is only for a business with no full-time workers besides owners and spouses.
If you plan to hire full-time staff soon, ask about other plans first. Otherwise, pick a provider and open the plan before your deadline.
2. Save as the worker
This is your “employee” part. It works much like a job .
Pick a monthly amount you can keep up. The IRS sets a yearly cap. Check the current one on the IRS page below.
3. Add the business part
The business can add more, based on your pay. For an , that’s up to 25% of your salary—not your distributions.
Ask your tax pro to figure the exact business amount when you do year-end taxes.
No rush. Start with the first step.
Next: Check you qualify.
A small example
Made-up example: Lee runs an and pays herself $50,000 in salary. The business could add up to $12,500 (25%). Lee also saves $500 a month as the worker—$6,000 a year. Total: $18,500. Distributions don’t count toward the 25% figure. This is an example, not tax advice.
What could change your plan?
Limits change most years, and the rules for sole owners differ from s. Plans with large balances may need a yearly IRS form. Check the IRS pages and a tax pro before big deposits.
Solo 401(k), in plain words
The lesson is a start. Your life sets the order.
MONEY MOGUL brings great money teachers’ ideas beside your own bills, debts, and savings. You get one next step—and the reason behind it. Enter your numbers yourself. Keep business money separate.
Find my next step—freeCompletely free. No card, no trial, no paid plan.