Solo 401(k) Contribution Calculator
A solo 401(k), also called an individual 401(k) or self-employed 401(k), is a retirement plan available to self-employed individuals and business owners with no employees other than a spouse. It combines two types of contributions: an employee salary deferral and an employer profit-sharing contribution. For 2025, the employee deferral limit is $23,500, with an additional $7,500 catch-up contribution available for those aged 50 and older (and an enhanced $11,250 catch-up for ages 60 to 63 under SECURE 2.0). The employer contribution is limited to 25% of compensation for incorporated businesses, or approximately 20% of net self-employment income for sole proprietors after the self-employment tax deduction is applied. The combined total of employee and employer contributions cannot exceed $70,000 for 2025 (or $77,500 with the standard catch-up, $81,250 with the enhanced catch-up). Contributions to the traditional pre-tax portion reduce taxable income in the year contributed and grow tax-deferred; Roth contributions (available in many plans) use after-tax dollars but grow tax-free. This calculator computes the maximum allowable employee deferral, the maximum employer contribution based on net self-employment income, the combined total contribution, the immediate tax saving from pre-tax contributions, and the projected portfolio value at retirement with compounding growth.
With net self-employment income of $120,000, age 55, you can contribute up to -- to your solo 401k.
Solo 401k contribution calculation
The solo 401k allows two types of contributions: employee deferrals and employer contributions. Both are subject to annual limits set by the IRS.
Step 1: Calculate self-employment tax
Self-employment tax = Net SE income x 0.9235 x 15.3%
This includes both the employer and employee portion of Social Security and Medicare tax.
Step 2: Calculate adjusted net income
Adjusted net income = Net SE income - (Self-employment tax / 2)
The employer half of SE tax is deductible as a business expense.
Step 3: Calculate maximum employer contribution
Max employer contribution = Adjusted net income x 25%
The 25% rate is the effective employer contribution limit for self-employed individuals.
Step 4: Calculate total contribution
Total = Employee deferral + Employer contribution
Subject to annual combined limit ($70,000 in 2025, $77,500 with catch-up, $81,250 ages 60-63).
Worked example
Net SE income $120,000, age 55, employee deferral $23,500:
- Self-employment tax = 120,000 x 0.9235 x 0.153 = $16,975.80
- Adjusted net income = 120,000 - (16,975.80 / 2) = $111,512.10
- Max employer contribution = 111,512.10 x 0.25 = $27,878.03
- Total = 23,500 + 27,878.03 = $51,378.03
Solo 401k vs. SEP-IRA vs. SIMPLE IRA
For self-employed individuals, three main plan types are available. A solo 401k offers the highest contribution limits and allows catch-up contributions plus employee deferrals. A SEP-IRA is simpler to administer but limits contributions to approximately 20% of net SE income with no employee deferrals. A SIMPLE IRA is available only to businesses with 100 or fewer employees and has lower contribution limits. Choose the plan that best matches your income level and administrative comfort.
Solo 401k plans must be established by December 31 of the tax year in which you want to make contributions, though contributions can be made until the tax return filing deadline (including extensions). Most solo 401k plans are offered through financial institutions and custodians such as Fidelity, Charles Schwab, or E-TRADE.
A solo 401k also offers loan provisions: you can borrow up to 50% of your account balance (maximum $50,000) and repay over five years. SEP-IRAs and SIMPLE IRAs do not allow loans. This flexibility is valuable if you need access to retirement funds while preserving the account's long-term growth.
Solo 401k: frequently asked questions
What is a solo 401k?
A solo 401k (also called an individual 401k) is a qualified retirement plan for self-employed individuals and business owners with no full-time employees (except a spouse). It allows both employee deferrals and employer contributions, combining the benefits of a SEP-IRA and a traditional 401k. Solo 401k plans are administered by the business owner and offer higher contribution limits and investment control compared to SEP-IRAs.
How is net self-employment income calculated?
Net self-employment income is your business net profit or loss from Schedule C (or Schedule K-1 for partnerships). For self-employed workers, the self-employment tax is calculated as net SE income times 0.9235 times 15.3% (including both employer and employee portions). The employer contribution base is reduced by half of the SE tax. See IRS Publication 560 for details and worksheets.
Can I contribute more to a solo 401k than a SEP-IRA?
Yes. A solo 401k allows both employee deferrals (up to $23,500) and employer contributions (up to 25% of compensation), while a SEP-IRA allows employer contributions only (up to 25%). The total combined limit is higher with a solo 401k. However, solo 401k plans require annual compliance documents (Form 5500-SF if assets exceed $250,000) and more administrative overhead.
Are my solo 401k contributions tax-deductible?
Yes. Contributions to a solo 401k reduce your self-employment income and taxable income in the year made. Employee deferrals are deducted before calculating the employer contribution limit. Employer contributions are deductible as a business expense. The total tax savings depends on your federal and state marginal tax rates. See IRS Publication 560.
What if my net self-employment income is low?
If your net SE income is $400 or less, you do not owe self-employment tax and cannot make contributions to a solo 401k (you must have earned income to make an employee deferral). If you have income above $400 but less than $2,000, your allowable contribution will be small. The calculator shows the exact amount based on your income.
Can I have a solo 401k if I have employees?
No. A solo 401k is only for self-employed individuals with no full-time employees (a spouse can participate). If you hire employees, you must establish a separate traditional or SAFE 401k plan that covers all eligible employees. This plan cannot be treated as a solo 401k.
Official sources
- Solo 401k plan rules and limits: IRS One-Participant 401k Plans.
- 2025 contribution limits: IRS Rev Proc 2024-40.
- Self-employed retirement plans: IRS Publication 560.
- SECURE 2.0 Act changes: IRS Notice 2024-80.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information, not financial advice.