There is nothing wrong with working for an employer. For many people, it makes sense to work for another company who handles all of the details related to taxes, retirement funds, and other considerations. But some people can’t stand the thought of working for someone else. Some people need the freedom of entrepreneurship.

If you’ve decided that working for yourself is the right decision for you, you’ve likely had to handle some extra responsibilities related to your business, one of them being your retirement planning. Lucky for you, a unique opportunity, the Solo 401k plan, which is reserved only for self-employed individuals, can provide you with benefits beyond what you would ever imagine.

What is a Solo 401k?

As the name implies, a Solo 401k is a retirement plan for a person who is the only member of his or her company. These plans are lifesavers for those who want to leave what they see as restrictive companies in order to pursue their own dreams.

Essentially, these Solo 401k plans offer three main incentives:

  • Compelling Tax Benefits.
  • Significant Contribution Limits.
  • Loan Options.

Each of these benefits will be discussed in the subsequent sections of this article.

Tax Benefits of a Solo 401k

With a Solo 401k, you have the option of making either “Roth” or “Traditional” contributions, meaning that your money will be added to your retirement fund “after-tax” and “pre-tax” respectively. The Solo 401k affords you flexibility so that you can decide which type of contribution will work best for you and your business.

High Contribution Maximums

Solo 401k plans allow for a whopping $19,500 in contributions as an employee as well as $37,500 as an employer. Because you operate in both capacities in a solo venture, you can save as much as $57,000 per year with a Solo 401k plan.

Loan Options

It’s not something anyone wants to think about, but sometimes financial hardship can befall us. In these times, larger companies have some different options in terms of resources and ways of diverting funds in order to keep operations running. But for single member companies, there are far fewer options available. Therefore, with a Solo 401k, you have the ability to take out loans of as much as $50,000. This can be a massive help when you experience hardship of any kind.

Are You Ready to Start Your Solo 401k Plan?

If you’ve weighed your options and decided that the Solo 401k sounds like the best option for you, there are a few factors you’ll want to consider with regards to your plan provider:


  • Are there any costs associated with the plan? It’s possible that there will be extra fees imposed by your plan provider will significantly affect you. Before deciding on a provider, be sure you understand exactly what fees or extra costs are in place.
  • Is there available customer service? When you have questions, you need to know that someone can provide answers. Make sure your provider has a way for you to quickly receive answers to your questions.
  • Is the set-up process easy? Your provider shouldn’t make you jump through hoops just to get your plan up and running. Plan set-up and modification should be a simple process.