How Much Can You Contribute to a Solo 401k?

A Solo 401k plan is a retirement savings vehicle for self-employed individuals and small business owners with no employees, other than a spouse. It allows for high contribution limits because the owner can make contributions as both the “employee” and the “employer” of their business. This dual contribution structure provides access to the high ceilings of corporate 401(k) plans, but is tailored for the self-employed.

The Two Types of Solo 401k Contributions

Employee Contribution (Elective Deferral)

As the “employee” of your own business, you can make what is known as an elective deferral. For 2025, you can contribute up to 100% of your compensation, not to exceed $23,500. This contribution is your personal deferral from your earnings into the plan and operates similarly to how an employee at a large company contributes to their 401(k).

For individuals age 50 and over, the rules permit an additional “catch-up” contribution. For 2025, this catch-up amount is $7,500. A provision from the SECURE 2.0 Act introduces a higher catch-up for those aged 60 to 63, allowing an additional contribution of $11,250 in 2025.

Employer Contribution (Profit-Sharing)

In your capacity as the “employer,” you can make a separate contribution to the plan, known as a profit-sharing contribution. This amount is calculated as a percentage of your business’s income and is made in addition to the employee deferral.

For businesses structured as an S-Corporation or C-Corporation, the employer can contribute up to 25% of the owner’s W-2 salary. If you operate as a sole proprietorship or a single-member LLC, the calculation is based on your net adjusted self-employment income, which is a contribution of up to 20% of your net earnings. For all business types, the IRS imposes a limit on the amount of compensation that can be considered for this calculation, which is $350,000 for 2025.

Calculating Your Maximum Contribution Limit

The total amount you can contribute to a Solo 401k combines both employee and employer contributions. For 2025, this combined limit is $70,000. This cap does not include any catch-up contributions, which can raise the total limit to $77,500 for those 50 or over, or $81,250 for those aged 60-63. Your actual contribution is always the lesser of this IRS limit or the maximum calculated from your income.

Example: Sole Proprietor

The calculation for a sole proprietor begins with your net profit from Schedule C of your tax return. From this, you subtract one-half of your self-employment taxes to arrive at your net adjusted self-employment income. The employer portion of the contribution is 20% of this adjusted figure.

Consider a sole proprietor under age 50 with a net profit of $100,000. After accounting for self-employment taxes, their net adjusted self-employment income would be approximately $92,350. The maximum employer contribution would be 20% of this amount, or $18,470. They could also make the maximum employee contribution, for a total of $41,970.

If this same sole proprietor were 55 years old, the employer contribution remains the same ($18,470). However, they could add the standard catch-up to their employee contribution, bringing their total potential contribution to $49,470.

Example: S-Corporation Owner

For an S-Corporation owner, the calculation is based on the W-2 salary the owner pays themselves, and the employer contribution is 25% of this salary. The W-2 salary must be considered reasonable by the IRS for the work performed.

Imagine an S-Corp owner under age 50 who pays themselves a W-2 salary of $80,000. Their maximum employer contribution would be 25% of that salary, which is $20,000. In addition, they can make the maximum employee contribution, resulting in a total of $43,500.

If this S-Corp owner were 61 years old, the employer contribution would still be $20,000. Their employee contribution could include the enhanced catch-up for their age group, bringing their total combined contribution to $54,750.

Advanced Contribution Strategies

Roth Solo 401k Contributions

Many Solo 401k plans offer a Roth option, which applies only to the employee contribution portion. When you designate your employee deferrals as Roth, you contribute after-tax dollars, meaning you don’t get an upfront tax deduction. Your investments grow tax-free, and qualified withdrawals in retirement are also tax-free.

This does not change the employee contribution limit, which remains the same whether you choose pre-tax or Roth. The employer profit-sharing contribution, however, must always be made on a pre-tax basis, creating a mix of tax-deferred and tax-free funds that offers tax diversification.

Voluntary After-Tax Contributions

Some Solo 401k plans allow for voluntary after-tax contributions. These are distinct from Roth contributions, are not tax-deductible, and allow you to contribute up to the overall plan limit even after maxing out standard contributions. This feature is not available in all plans, so check your plan’s documents.

This strategy can pave the way for a “Mega Backdoor Roth Solo 401k.” After making the voluntary after-tax contribution, the plan may allow you to immediately convert those funds into the Roth portion of your Solo 401k. Since the original contribution was made with after-tax money, this conversion is a tax-free event, allowing a much larger amount into a Roth account than direct limits permit.

Contribution Deadlines

The deadlines for Solo 401k contributions differ for the employee and employer roles, and understanding them is important for compliance. Missing these deadlines can result in losing the ability to make that year’s contribution. The deadline for your employee contribution is the end of the calendar year, December 31. However, for sole proprietorships, the SECURE 2.0 Act allows these contributions to be made up until the tax filing deadline. For S-Corporation owners, the employee deferral must be elected by year-end to be reflected on the Form W-2.

The employer profit-sharing contribution has a more generous deadline and can be made anytime up until your business’s tax filing deadline, including extensions. For a sole proprietorship, this is April 15 of the following year, or October 15 with an extension. For S-Corporations, the deadline is March 15, or September 15 with an extension.