The Pros of Solo 401(k) Plans for Entrepreneurs
The Pros of Solo 401(k) Plans for Entrepreneurs For entrepreneurs and self-employed individuals, a Solo 401(k) can be a powerful retirement savings tool. Designed specifically for business owners with no employees (other than a spouse), this plan allows entrepreneurs to take advantage of both employee and employer contributions, potentially resulting in significant retirement savings. Here’s why Solo 401(k) plans are a great option for entrepreneurs, and how a retirement investment advisor can help optimize its use. Higher Contribution Limits One of the most significant advantages of a Solo 401(k) is the ability to contribute more money than other retirement plans like IRAs or SEP IRAs. For 2025, an individual under 50 can contribute up to $22,500 as an employee, and as the employer, they can contribute an additional 25% of their net self-employment income. If you're 50 or older, you can make an additional catch-up contribution of $7,500, bringing the total annual contribution limi...