What is a Solo 401(k) and who is eligible?

A Solo 401(k) is a 401(k) plan covering only a business owner (and spouse, if compensated) with no common-law employees. Self-employed sole proprietors, single-member LLCs taxed as sole proprietors, and partnerships where only the partners and their spouses work qualify.

How much can I contribute to a Solo 401(k) for 2026?

The contribution combines two pieces: (1) elective deferrals up to the §402(g) annual limit (age 50+ catch-up is on top), and (2) an employer profit-share up to 25% of §401(c) compensation, capped by §415(c). The combined total pushes well above a SEP-IRA but the plan document must be in place before deferrals start.

Can I have a Solo 401(k) if I hire employees?

No — hiring any non-spouse common-law employee disqualifies the solo plan. The plan must be terminated and contributions unwound before the new hire joins payroll. Once terminated, switching to a multi-participant 401(k) or a SEP-IRA covers the workforce without the lost year.

When is the Solo 401(k) employer contribution deadline?

The employer profit-share side follows the §404(a)(5) extended due-date — typically the extended business return deadline. The elective deferral side must come out of compensation by year-end, not in April. Solo 401(k) plan documents can be adopted retroactively up to the extended return due-date for the employer contribution only.

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Solo 401(k) employer contribution

Solo 401(k) for the self-employed: 2026 limits

A Solo 401(k) lets owner-only businesses combine elective deferrals with 25% employer profit-sharing — elective deferral limits, §401(c) compensation, and the hiring-rule pitfalls explained.

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Citation backbone

This article rests on the IRC section below — every recommendation Taxerity.AI surfaces cites this same scaffolding.

IRC § 401(c)(2)IRS Pub. 560

Who can claim this

Who qualifies for the solo 401(k) employer contribution

Self-employed with net SE income greater than the elective-deferral — eligible for the 25% employer profit-share.

Plan document on file with §401(c) language covering sole proprietor (and spouse if applicable) as the only participant.
Elective-deferral side redacted to the §402(g) limit; employer side calculated against Schedule C net SE income (compensation definition under §401(c)(2)(A)(i)).
Funding completed by the §404(a)(5) extended due-date — not a late deposit.

How to claim — step-by-step

How to claim the solo 401(k) employer contributionon this year's return

Plan document on file with §401(c) language covering sole proprietor (and spouse if applicable) as the only participant.
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Elective-deferral side redacted to the §402(g) limit; employer side calculated against Schedule C net SE income (compensation definition under §401(c)(2)(A)(i)).
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Funding completed by the §404(a)(5) extended due-date — not a late deposit.
.

What catches practitioners off guard

The risk to review

Why AI + human review matters here

Hiring a non-spouse employee mid-year disqualifies the solo-401(k) — the plan must be terminated and contributions unwound before any common-law employee joins the payroll.

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FAQ

Common questions about the solo 401(k) employer contribution

Quick answers to the questions solo CPAs and enrolled agents ask us most often about this deduction.

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