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Understanding Solo 401(k) Contributions

A Solo 401(k), also known as an Individual 401(k), is a retirement plan for self-employed individuals and small business owners with no employees (other than a spouse). Its main advantage is the high contribution limit, as you can contribute as both the "employee" and the "employer."

1. The "Employee" Contribution

As the employee, you can contribute 100% of your compensation up to the annual limit. For 2024, this limit is **$23,000**. If you are age 50 or over, you can make an additional "catch-up" contribution of **$7,500**.

2. The "Employer" Contribution (Profit Sharing)

As the employer, you can contribute up to **20%** of your net adjusted self-employment income. This is the part that allows you to supercharge your savings beyond what a typical employee could contribute.

Total Contribution Limit

There is an overall limit. The sum of your employee and employer contributions cannot exceed **$69,000** for 2024 (or $76,500 if age 50 or over). Our calculator automatically applies these IRS limits.

How to Use the Solo 401(k) Calculator

1. Enter Your Business Income: Input your net adjusted self-employment income. This is your gross self-employment income minus one-half of your self-employment taxes.
2. Enter Your Age: Your age determines if you are eligible for "catch-up" contributions (age 50 and over).
3. Calculate: The calculator will show your maximum possible contribution, broken down into the "Employee" and "Employer" parts.