Individual 401(k) Plan

Individual 401(k)s (or Solor 401(k)s) are the ultimate plan if you are looking to save the largest amount of money for retirement. They provide much of the same profit-sharing advantages as a typical 401(k). But, Individual 401(k)s provide less complexity and lower costs.


Individual 401(k) Plan Benefits

  • Participants can borrow up to 50% of the account balance up to a maximum of $50,000. The loan can be for any reason.
  • As the Trustee of your plan, you can have checkbook control of your funds, so you have your money when you need it.
  • You can contribute up to ten times more annually than you can to an IRA and reduce your taxable income.
  • A brokerage account for the traditional portion of your asset is included with your plan, so you have the freedom to diversify the way you want.
  • Can invest in any permissible alternative asset to build retirement wealth.

Who Is Eligible for an Individual 401(k) Plan?

Self-employed who generate income from their business to make contributions to the plan. All business entity types are eligible for this plan. This includes sole proprietors, partnerships, and corporations.

Employee Restrictions

Your business cannot have employees other than yourself, or your spouse. The business owners or partners are considered owner-employees rather than employees. Certain employees are excluded from coverage in the plan. Employees under 21 and employees that work less than 1,000 hours annually are excluded from coverage. Union employees and non-resident alien employees are also excluded.

Individual 401(k) Plan Contribution Limits as of March, 2023. For historical values, please visit IRS Contribution Limits.

Employee Salary Deferral: $22,500
Salary Deferral Catch-Up Contribution (age 50+): $7,500
Employer Profit-Sharing Contribution: Up to 25% of salary of self-employed earning
Total Combined Contribution-Salary Deferral plus Profit Sharing Match (under age 50): $66,000
Total Combined Contribution-Salary Deferral plus Profit Sharing Match (age 50+): $73,500

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