Solo 401(k): the highest limits for owners with no employees
A solo 401(k) lets you save as both the employee and the employer. For most self-employed people it allows the most savings of any simple plan. Here are the 2026 limits, how to work out your number, and the deadlines.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 9, 2026.
How it works
You make two kinds of contributions to the same account. As the employee, you defer part of your pay. As the employer, your business adds a profit-sharing contribution. Both are deductible (or the employee part can be Roth, if your plan allows).
2026 limits
| Contribution | 2026 limit | Notes |
|---|---|---|
| Employee deferral | $24,500 | Pre-tax or Roth. Cannot exceed your pay (net earnings). |
| Catch-up, age 50 or older | $8,000 | On top of the limits below |
| Catch-up, ages 60 to 63 | $11,250 | In place of the $8,000 |
| Employer contribution | Up to 25% of W-2 pay (S corporation), or about 20% of net earnings (sole proprietor) | For the self-employed the effective rate is 25% divided by 1.25 |
| Total, not counting catch-up | $72,000 | Employee plus employer |
| Pay that counts | $360,000 | Pay above this adds nothing |
Working out your number
- Sole proprietor or single-member LLC: take your net profit, subtract half of your self-employment tax, and multiply by 20%. That is the employer contribution. Add your own deferral.
- S corporation owner: the employer contribution is 25% of your W-2 salary, not your profit. A very low salary lowers the limit, so weigh this against payroll tax savings.
- Example (sole proprietor): $100,000 of net profit, age 45. Half of self-employment tax is about $7,065, so the business contribution is about $18,587. Add a $24,500 deferral for a total near $43,087.
Deadlines
- Normally: adopt the plan by December 31 to make employee deferrals for that year.
- New under SECURE 2.0: a sole proprietor with no employees can adopt a new 401(k) after year-end, by the tax filing deadline (without extensions), and treat it as set up for the prior year. S corporation owners cannot use this.
- Employer contribution: can be made as late as the due date of the business's tax return, including extensions.
- Annual report: Form 5500-EZ when plan assets are $250,000 or more at year-end.
Roth, catch-up and other details
- Roth deferrals are allowed if your plan document includes them: no deduction now, tax-free withdrawals later when the rules are met.
- New Roth catch-up rule: if your W-2 pay from your own corporation was over $150,000 in 2025, your 2026 catch-up contributions must be Roth. It does not apply to a sole proprietor's self-employment income.
- Spouse: a spouse who works in the business can have their own deferral and employer contribution, which can nearly double the household total.
- No testing: with no employees, there is no yearly nondiscrimination testing.
Things to watch
- Hiring an employee changes everything. Talk to us first.
- Defer only what your pay supports, and keep the combined limit across all plans in mind.
- Choose a plan provider with low fees, Roth and the features you need.
- Keep plan documents and statements with your tax records.
We calculate the right contribution before year-end and handle the deduction on your return. Book a 20-minute call.
Common questions
Who can have a solo 401(k)?
A business owner with no employees, or the owner and a spouse who works in the business. If you hire employees who meet the plan's eligibility rules, they must be included.
Can I open one after the year ends?
Normally the plan must be adopted by December 31. Under SECURE 2.0, a sole proprietor with no employees can adopt a new 401(k) after year-end, as long as it is adopted by the tax filing deadline (without extensions), and treat it as in place for the prior year. This applies to sole proprietors, not to S corporation owners.
Does the $24,500 limit apply if I also have a job with a 401(k)?
Yes. The employee deferral limit is per person across all plans. If you defer $10,000 at your job, you can defer only $14,500 more in your solo 401(k). The business contribution is separate, subject to the overall limit.
Is there a yearly filing?
A solo 401(k) generally files Form 5500-EZ once plan assets reach $250,000 at the end of the year.
Can I borrow from it?
Some solo 401(k) plans allow loans, but only if your plan document says so. Ask your plan provider and check the limits before relying on it.
Official sources
- IRS: One-participant 401(k) plans
- IRS Publication 560
- IRS Notice 2025-67 (2026 limits)
- IRS: Retirement plans for self-employed people
Let's talk about your taxes, your business, your plans.
Tell us what you need and we will get back to you quickly. There is no pressure: just a friendly conversation and a clear next step.
4260 Westbrook Dr, Suite 107
Aurora, IL 60504
Monday to Friday, 9:00 am to 5:00 pm, by appointment. Saturday and Sunday by appointment when needed.