Solo 401k Contributions: The Complete Guide

Contribution Limits

2023 & 2024 Limits

• 2023: $66,000 if you’re under 50; $73,500 if you’re 50 or older.
• 2024: $69,000 if you’re under 50; $76,500 if you’re 50 or older.

Breaking Down Contributions

Since you’re both the employee and employer of your business, you can contribute in two ways:

2023 Contributions

• Employee Contributions: Up to 100% of your income, capped at $22,500.
• Employer Contributions: Up to 25% of your compensation if incorporated, or about 20% if not.

2024 Contributions

• Employee Contributions: Up to 100% of your income, capped at $23,000.
• Employer Contributions: Same rules as 2023, but with the new higher overall limit of $69,000.

What Counts as Income?

Your eligible income is your W-2 earnings or your net self-employment income after deducting these:

1. Half of your self-employment taxes.
2. Contributions to your Solo 401k.

For self-employed individuals, you’ll need to pay self-employment taxes if you earn $400 or more. Generally, 92.35% of your net earnings from self-employment is subject to tax.

Pre-Tax vs. Post-Tax Contributions

• Pre-Tax Contributions: These are tax-deductible and lower your taxable income for the year. However, withdrawals in retirement are taxed as regular income.
• Post-Tax Contributions (Roth Solo 401k): You don’t get a tax break upfront, but withdrawals in retirement are completely tax-free.

Frequently Asked Questions

What’s the maximum I can contribute?

For 2023, the max is $66,000 ($73,500 if 50+). For 2024, it increases to $69,000 ($76,500 if 50+).

How much can I put into a Roth Solo 401k?

Only the employee portion can go into a Roth account:

• 2023: $22,500 ($30,000 if 50+).
• 2024: $23,000 ($30,500 if 50+).

What’s the Mega Backdoor Roth?

This strategy lets you contribute the full Solo 401k limit as post-tax (Roth). That means up to $66,000 ($73,500 if 50+) in 2023, or $69,000 ($76,500 if 50+) in 2024.

Are contributions tax-deductible?

• Pre-Tax Contributions: Yes, these reduce your taxable income. But withdrawals in retirement are taxed.
• Post-Tax Contributions: No upfront tax deduction, but withdrawals are tax-free.

I am a W2 Employee with a 401k. Does that affect my Solo 401k?

Yes, employee contribution limits are shared across all your 401k plans. For example, in 2024, if you’re under 50 and contribute $5,000 to your work 401k, you’ll have $18,000 left for your Solo 401k employee contribution.

Can I roll over funds into my Solo 401k?

There’s no limit to how much you can roll over from other retirement accounts—except a Roth IRA.