If you’re a solopreneur, you’re already wearing multiple hats—CEO, CFO, marketer, customer service rep, and everything in between. But have you thought about adding “retirement plan administrator” to the list?
Before you dismiss it as just another task, consider this: A Solo 401(k) could be the most powerful wealth-building tool at your disposal.
Unlike a traditional IRA, which limits you to just $7,000 per year in contributions (or $8,000 if you’re over 50), a Solo 401(k) allows you to contribute up to $69,000 in 2024 ($76,500 if you’re 50 or older)—potentially 10x more savings in tax-advantaged accounts.
Let’s break down why every solopreneur should be taking advantage of this under-the-radar retirement powerhouse.
Why a Solo 401(k) Crushes a Traditional IRA
If you’re self-employed with no employees (except maybe your spouse), the Solo 401(k) is built specifically for you. It offers:
✅ Massively higher contribution limits (up to $69,000 in 2024)
✅ Tax-deferred OR tax-free growth (Traditional and Roth options available)
✅ The ability to take out tax-free loans from your own account
✅ Flexible investment choices (stocks, bonds, ETFs, real estate, crypto—you name it)
Compare that to a Traditional or Roth IRA, which limits you to just $7,000 per year ($8,000 if 50+). If you want to supercharge your retirement savings, the Solo 401(k) is a no-brainer.
How You Can Contribute Up to $69,000
A Solo 401(k) lets you contribute in two ways, because you wear two hats:
1️⃣ As the Employee – You can contribute up to $23,000 in 2024 ($30,500 if you’re 50 or older). This is the same limit as a corporate 401(k).
2️⃣ As the Employer – Since you’re also the boss, you can contribute an additional 25% of your compensation (or 20% if you’re a sole proprietor or single-member LLC).
Example: How a High-Earning Solopreneur Maximizes Contributions
Let’s say you run a successful consulting business and pay yourself $100,000 in W-2 wages through your S-corp:
- Employee Contribution: $23,000
- Employer Contribution: 25% of $100,000 = $25,000
- Total Solo 401(k) Contributions: $48,000
If you earn $160,000+, you can hit the $69,000 cap—which is nearly 10x what a traditional IRA allows.
If you’re 50 or older? You get a $7,500 catch-up contribution, bringing the total to $76,500.
A Solo 401(k) allows Roth contributions, personal loans, and higher tax advantages, making it the best retirement vehicle for high-earning solopreneurs.
Tax Advantages: Save Now or Save Later?
One of the best things about a Solo 401(k) is that you can choose between:
✅ Traditional (Tax-Deferred): Contributions reduce your taxable income now, lowering your tax bill today. You’ll pay taxes later when you withdraw in retirement.
✅ Roth (Tax-Free Growth): Contributions are made with after-tax money, but withdrawals in retirement—including all the investment growth—are 100% tax-free.
For solopreneurs expecting higher future income or a business exit, a Roth Solo 401(k) is a great way to build tax-free wealth.
Bonus: You Can Borrow from Your Solo 401(k)
Unlike an IRA, a Solo 401(k) allows you to take out a loan—up to $50,000 or 50% of your balance.
- Need capital for a business investment?
- Facing an emergency and don’t want to tap your personal savings?
- Want a short-term loan with no bank approval required?
You can borrow from your own 401(k) and pay yourself back with interest—without impacting your credit score.
How to Open a Solo 401(k) (and When to Act)
Setting up a Solo 401(k) is easier than you think. Many providers (like Fidelity, Vanguard, and E-Trade) offer free or low-cost options.
To maximize contributions for 2025, you’ll need to set up the plan by December 31, 2025, even if you don’t fund it until the following year.
Final Thought: Take Advantage of Your Superpower
As a solopreneur, you don’t have a company matching your 401(k) contributions—but you have something even better: the ability to control your own financial future.
A Solo 401(k) gives you massive tax advantages, flexible investment options, and sky-high contribution limits—helping you build long-term wealth faster than a traditional IRA ever could.
Don’t leave this on the table. If you’re serious about financial freedom, a Solo 401(k) is one of the best moves you can make for your future.
Want help setting up the right retirement plan for your business? Let’s talk.