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Solo 401k FAQ

What are the Solo 401k contribution limits?

The 2015 Solo 401k contribution limit is $53,000 or up to $59,000 if age 50+.

Are the Solo 401k contributions mandatory each year?

Solo 401k plan contributions are discretionary and can be increased, decreased or stopped on a year by year basis.

Can Solo Roth 401k contributions be made?

Yes. There is an option to make Solo Roth 401k contributions with the salary deferral portion of the Solo 401k. Contributions into a Solo Roth 401k are not tax deductible, but withdrawals are tax free after age 59 ½. In 2015 Solo Roth 401k contributions can be made up to $18,000 or $24,000 if age 50+.

Can the profit sharing portion of the Solo 401k be made as a Roth (after-tax) contribution?

No. The profit sharing portion of the Solo 401k contribution is not eligible to be made as a Roth contribution. Profit sharing contributions are made pre-tax and are tax deductible.

What is the difference between making Roth 401k (after-tax) and Traditional (pre-tax) contributions to the Solo 401k?

The basic difference between a Roth Solo 401k and a Traditional Solo 401k is that the Roth 401k is funded with after-tax contributions while the Traditional 401k is funded with pre-tax contributions. In other words, with a Roth 401k you pay taxes today in return for a tax free withdrawals in retirement. Traditional 401k contributions are tax deductible and are made pre-tax so you save taxes today, but withdrawals are taxed in retirement.

Are Solo 401k loans allowed?

Yes. Tax free Solo 401k loans are permitted. Loans up to 50% of the total value of the Solo 401k up to a maximum of $50,000 are permitted. IRS rules do not allow loans with IRAs, SEP IRAs, or Keogh (Money Purchase/Profit Sharing Plans).

Solo 401k FAQ

FAQs. Find answers to your questions about the Solo 401k.


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*The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

*Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.