Quick Answer
A Solo 401(k) lets a self-employed individual with no employees other than a spouse contribute as both employee and employer: up to $24,500 in employee deferrals plus employer contributions of 20% of net self-employment income, capped at $72,000 combined. Traditional or Roth designations are both available, with age-based catch-up contributions on top.
The Solo 401(k), also called an individual 401(k) or one-participant 401(k), is designed for self-employed individuals with no employees (other than a spouse). It follows the same rules, contribution limits, and tax treatment as traditional 401(k) plans.
What Are the 2026 Solo 401(k) Contribution Limits?
- Employee deferral limit (2026): $24,500 (under age 50)
- Employer contribution: Up to 20% of net self-employment income (after the self-employment tax deduction)
- Total combined limit (2026): $72,000 (employee + employer, excluding catch-up)
- Can designate contributions as Traditional (pre-tax) or Roth (after-tax)
- Roth Solo 401(k) contributions grow tax-free; qualified distributions are tax-free
- Loans permitted (up to $50,000 or 50% of vested balance, whichever is less)
What Are the Catch-Up Contribution Provisions?
| Age | Catch-Up Amount (2026) | Notes |
|---|---|---|
| Under 50 | $0 | Standard deferral only |
| 50-59 | $8,000 | Standard catch-up |
| 60-63 | $11,250 | Super catch-up |
| 64+ | $8,000 | Reverts to standard catch-up |
- Roth catch-up mandate (2026): Employees earning over $150,000 in Federal Insurance Contributions Act (FICA) wages in the prior year must make catch-up contributions on a Roth (after-tax) basis only
- Those earning $150,000 or less may choose pre-tax or Roth catch-up
Exam Tip: Gotchas
- The "super catch-up" applies ONLY at ages 60-63. It does NOT apply at age 64 or above; the catch-up reverts to the standard amount. The exam may test the specific age window.
- Why 20%, not 25%. A plan document can state a 25% profit-sharing rate, but that rate is written for common-law employees paid W-2 wages. A sole proprietor's own net self-employment income and their own contribution are circular: the contribution itself reduces the income it is based on. The IRS solves this with a reduced rate: 20% applied to net self-employment income after the self-employment tax deduction produces the same result as 25% would under the W-2 formula. The 20% rate applies specifically to the owner's own net self-employment income, not to any W-2 wages the plan might otherwise measure against.
What Should You Check on Exam Day?
- A Solo 401(k) is for self-employed individuals with no employees other than a spouse; it follows regular 401(k) rules
- 2026 employee deferral limit is $24,500 (under 50), with age-based catch-up on top
- Employer contributions are capped at 20% of net self-employment income, not the 25% W-2 rate
- The combined 2026 limit (employee + employer, excluding catch-up) is $72,000
- Both Traditional and Roth designations are available; Roth grows tax-free with tax-free qualified distributions
- The age 60-63 super catch-up ($11,250 in 2026) reverts to the standard catch-up amount at 64+
- Employees earning over $150,000 in prior-year FICA wages must make catch-up contributions on a Roth-only basis
- Loans are permitted up to $50,000 or 50% of vested balance, whichever is less