Direct Answer
A Solo 401(k) (individual 401(k) or one-participant 401(k)) is a full 401(k) plan for self-employed individuals with no employees other than a spouse. The 2026 total annual limit is $72,000: up to $24,500 in employee elective deferrals (plus age 50+ catch-up of $8,000 or ages 60-63 catch-up of $11,250), plus employer profit-sharing up to 25% of net self-employment income. Solo 401(k) allows Roth contributions and may permit after-tax contributions for a "mega backdoor Roth."
Solo 401(k) Profile: 2026 Contribution Limits for Self-Employed
2026 Contribution Limits
| Component | 2026 Limit |
|---|---|
| Employee elective deferral (pre-tax + Roth) | $24,500 |
| Age 50+ catch-up (standard) | $8,000 additional |
| Ages 60-63 higher catch-up (SECURE 2.0) | $11,250 additional |
| Employer profit-sharing contribution | Up to 25% of net SE income (after SE tax deduction) |
| Total annual additions (§415) | $72,000 (+ catch-up for age 50+) |
For the self-employed, the effective employer profit-sharing rate is approximately 20% of gross net SE profit (after deducting the self-employment tax deduction). A person with $100,000 net SE profit can contribute roughly $18,587 as employer contribution plus up to $24,500 employee deferral = $43,087 total. Source: IRS Rev. Proc. 2024-40; IRS Publication 560.
Eligibility and Plan Setup
A Solo 401(k) is available to self-employed individuals and business owners (sole proprietors, LLC members, S-corp owners who pay themselves W-2 wages, partners) with no employees other than a spouse. The spouse of the business owner may participate if they are employed by the business.
Plan establishment deadline: Must be established by December 31 of the tax year for which contributions are made (unlike SEP IRAs, which can be established as late as the tax filing deadline including extensions).
Loss of eligibility: If a non-spouse employee works more than 1,000 hours in any plan year, the plan must be converted to a standard 401(k) plan with ERISA compliance requirements (nondiscrimination testing, Form 5500, etc.).
Form 5500: Required when plan assets exceed $250,000 at year-end (Form 5500-EZ for one-participant plans).
Roth and Mega Backdoor Roth
Solo 401(k) plans can offer both traditional (pre-tax) and Roth designations for employee elective deferrals, subject to the $24,500 combined limit. There are no income limits for Roth 401(k) contributions.
Some Solo 401(k) plan documents also allow after-tax (non-Roth) contributions and in-plan Roth conversions, enabling a "mega backdoor Roth" strategy. Under this strategy, the self-employed person contributes after-tax dollars up to the §415 limit ($72,000 minus employee deferrals and employer contributions), then immediately converts the after-tax amount to Roth (with only the earnings being taxable). This requires a plan document that specifically permits after-tax contributions and in-plan Roth conversions; not all providers offer this feature.
Frequently Asked Questions
- What is the Solo 401(k) contribution limit for 2026?
- The 2026 Solo 401(k) total limit is $72,000 (Section 415). This combines employee elective deferrals ($24,500, plus age 50+ catch-up of $8,000 or ages 60-63 catch-up of $11,250) and employer profit-sharing (up to 25% of net SE income after SE tax deduction, effectively ~20% of gross SE profit). For someone with $100,000 net SE profit: ~$18,587 employer plus $24,500 employee = $43,087 total. Source: IRS Rev. Proc. 2024-40; IRC Section 415.
- Who is eligible for a Solo 401(k)?
- Self-employed individuals and business owners with no employees other than a spouse. Sole proprietors, LLC owners, S-corp owner-employees, and partners may participate. The business spouse may participate if employed by the business. If a non-spouse employee works 1,000+ hours in a plan year, the plan must convert to a full ERISA 401(k). Must be established by December 31 of the applicable tax year. Source: IRC Section 401(a); IRS Publication 560.
- How does a Solo 401(k) compare to a SEP IRA for self-employed individuals?
- Both allow up to $72,000 total in 2026, but the Solo 401(k) allows employee elective deferrals ($24,500) on top of employer contributions. At lower income levels (e.g., $50,000 net SE income), the Solo 401(k) allows far more total contributions (~$33,793 vs. ~$9,293 in a SEP IRA). The Solo 401(k) also allows Roth contributions and potential mega backdoor Roth. The SEP IRA requires no plan document and is simpler. Source: IRS Publication 560.