If you’re self-employed with no full-time employees, a Solo 401k can let you shelter far more of your income for retirement than a typical IRA. Use the solo 401k calculator below to estimate your maximum employee and employer contributions based on your net self-employment profit and age, then read on for a full breakdown of the rules.
Solo 401k Contribution Calculator
Enter your net self-employment profit (Schedule C net profit) and your age.
What Is a Solo 401k?
A Solo 401k (also called an individual 401k or one-participant 401k) is a retirement plan designed for self-employed individuals and small business owners who have no full-time employees other than a spouse. Because you are effectively both the “employer” and the “employee” in your own business, a Solo 401k lets you contribute in both capacities, which typically allows you to save far more per year than a traditional or Roth IRA.
Solo 401k plans are available to sole proprietors, single-member LLCs, partnerships, and S-corp or C-corp owners, as long as the business has no other full-time common-law employees eligible for the plan.
Solo 401k Contribution Limits Explained
Your total Solo 401k contribution has two parts: the employee (elective deferral) contribution and the employer (profit-sharing) contribution. Both are added together, subject to an overall annual cap.
| Contribution Type | 2026 Illustrative Limit | Basis |
|---|---|---|
| Employee elective deferral (under 50) | $23,500 | Up to 100% of compensation, capped at limit |
| Employee elective deferral (age 50+) | $31,000 | Includes standard catch-up contribution |
| Employee elective deferral (age 60-63) | ~$34,750 | SECURE 2.0 “super catch-up” |
| Employer profit-sharing contribution | Up to 25% of compensation | ~20% of net SE income after SE tax adjustment |
| Overall combined limit (under 50) | $70,000 | Employee + employer combined |
| Overall combined limit (age 50+) | $77,500 – $81,250 | Includes applicable catch-up |
These figures are illustrative for 2026 and are adjusted annually for inflation by the IRS. Always confirm the current-year limits before filing or making contributions.
How Self-Employment Tax Affects Your Contribution Limit
Unlike a W-2 employee, a sole proprietor’s “compensation” for retirement plan purposes is not simply gross profit. The IRS requires you to first deduct one-half of your self-employment tax from your net profit to arrive at your net earnings from self-employment, and the employer contribution is calculated as a percentage of that adjusted figure rather than 25% flat.
In practice, this means the employer contribution works out to roughly 20% of your net Schedule C profit, not 25%, because of this adjustment. Our calculator estimates the SE tax deduction using the standard formula: net profit multiplied by 0.9235, multiplied by the 15.3% SE tax rate, divided by two. This is the widely used simplified approximation; the fully precise calculation is technically circular (SE tax itself depends partly on the retirement deduction) and is best confirmed with a CPA or tax software, especially for high-income filers.
Solo 401k vs SEP IRA vs SIMPLE IRA
| Feature | Solo 401k | SEP IRA | SIMPLE IRA |
|---|---|---|---|
| Employee deferral allowed | Yes, up to $23,500+ | No | Yes, lower limit (~$16,500) |
| Employer contribution | Up to ~20% net SE income | Up to 25% net SE income | Match or 2% nonelective |
| Best for lower income | Yes, higher limits at lower income due to employee deferral | Less favorable at low income | Good for simple, low-cost setups |
| Roth option | Yes | No (traditional only, generally) | SIMPLE Roth available in some plans |
| Administrative complexity | Moderate (Form 5500-EZ once assets grow) | Low | Low |
For most self-employed people with no employees, the Solo 401k allows the highest total contribution at a given income level because it combines both the employee deferral and the employer contribution, whereas a SEP IRA only offers the employer-style contribution.
Who Qualifies for a Solo 401k?
You generally qualify for a Solo 401k if:
– You have self-employment income (sole proprietor, single-member LLC, partnership, or S-corp/C-corp owner)
– You have no full-time common-law employees other than yourself and, if applicable, your spouse
– Part-time employees who work under 1,000 hours per year can generally be excluded
If your business grows and you hire full-time employees, you will typically need to transition to a different plan type, such as a SEP IRA or a traditional 401k, since those plans have nondiscrimination rules that apply once other employees are eligible.
Roth vs Traditional Solo 401k Options
Most Solo 401k providers let you choose between traditional (pre-tax) and Roth (after-tax) treatment for your employee deferral, and some also allow Roth treatment for the employer contribution under SECURE 2.0.
– Traditional Solo 401k: contributions are tax-deductible now, and withdrawals in retirement are taxed as ordinary income.
– Roth Solo 401k: contributions are made with after-tax dollars, but qualified withdrawals in retirement, including growth, are tax-free.
Many self-employed savers use a mix: Roth for the employee deferral portion when in a lower tax bracket, and traditional for the larger employer profit-sharing portion to reduce current-year taxable income. A tax professional can help decide the best split for your situation.
Worked Example
Suppose a 45-year-old freelance consultant has a net Schedule C profit of $100,000 for the year.
– Estimated SE tax deduction: $100,000 x 0.9235 x 0.153 / 2 = about $7,065
– Adjusted net earnings: $100,000 – $7,065 = about $92,935
– Max employee deferral: $23,500 (capped at the annual limit, well under adjusted earnings)
– Max employer contribution: about 20% of $92,935 = about $18,587
– Total max Solo 401k contribution: about $23,500 + $18,587 = about $42,087
That’s over four times what this consultant could contribute to a Traditional or Roth IRA alone, all while reducing current-year taxable income (if using traditional contributions).
FAQs
What is the maximum Solo 401k contribution for 2026?
For 2026 (illustrative figures, confirm current IRS limits), the maximum employee deferral is $23,500 ($31,000 if age 50+, or about $34,750 for ages 60-63), and the employer profit-sharing contribution can add up to roughly 20% of adjusted net self-employment earnings, with a combined overall cap of $70,000 (higher with catch-up contributions).
Can I contribute to a Solo 401k if I have a full-time job with a W-2 401k too?
Yes, if you also have self-employment income on the side, such as freelance or consulting work, you can open a Solo 401k for that business. However, your total employee elective deferral across all 401k plans combined (W-2 plus Solo 401k) is limited to a single annual employee deferral cap, though the employer contribution to your Solo 401k is separate and calculated independently.
Does a Solo 401k work if my spouse also works in the business?
Yes. A Solo 401k can cover a self-employed individual and a spouse who also earns income from the same business, with each person able to make their own employee and employer contributions based on their own compensation, effectively doubling the household’s contribution potential.
Is a Solo 401k better than a SEP IRA for a self-employed person?
For most people with moderate self-employment income and no employees, a Solo 401k allows a higher total contribution than a SEP IRA at the same income level, because it includes both an employee deferral and an employer contribution, while a SEP IRA only allows the employer-style contribution. A Solo 401k also allows Roth contributions, which a SEP IRA generally does not.
How is the Solo 401k employer contribution calculated for an S-corp owner?
If you run your business as an S-corp and pay yourself a W-2 salary, the employer contribution is based on your actual W-2 wages rather than net Schedule C self-employment income, and there is no self-employment tax adjustment to apply. The employer contribution is generally up to 25% of your W-2 wages, subject to the same overall combined limit. This calculator is built for sole proprietor/1099 filers; S-corp owners should confirm exact figures with their payroll or tax provider.