Solo 401(k) — eliminate the tax drag

SOLO 401(K) · BUSINESS OWNERS & INDEPENDENT CONTRACTORS

Self-employed with no full-time W-2 employees? A custom 401(k) plan can move up to $80,000 a year into tax-free Roth accounts (2026, with the age-50+ catch-up) — plus another $7,500–$17,200 a year through the Backdoor Roth IRA for you and a spouse.

ImpactAdvisor LLC is an independent, fee-only fiduciary RIA in San Francisco. These are estimates and general information only; check with your CPA or financial professional before taking action.

What a solo 401(k) is, and who qualifies

A solo 401(k) is an owner-only 401(k): a plan for a business with self-employment income and no full-time non-owner W-2 employees. Any entity type can sponsor one — sole proprietorship, partnership, LLC, S-corporation or C-corporation. A spouse working in the business can participate as well.

The plan is powerful because the owner occupies both sides of it. You contribute as the employee (pre-tax or Roth), again as the employer (profit sharing), and — where the plan document allows — a third time in voluntary after-tax dollars that convert to Roth. That third bucket is the Mega Backdoor Roth, and it is why the annual ceiling is measured in tens of thousands rather than the IRA limit.

Contributions must come from earned income — not investment or passive income — and cannot exceed what the business pays you. For a business taxed as an S-corporation, contributions are based on W-2 wages, not pass-through income.

Solo 401(k) contribution limits by year

The annual additions limit is the ceiling across all sources — employee deferrals, employer profit sharing, and voluntary after-tax contributions — per participant.

Solo 401(k) annual additions limit by tax year, with age 50+ and age 60–63 catch-up amounts.
Tax year	Annual contribution limit	Catch-up, age 50+	Catch-up, age 60–63
2024	$69,000	$7,500	—
2025	$70,000	$7,500	$11,250 (instead of $7,500)
2026	$72,000	$8,000	$11,250 (instead of $8,000)

The Backdoor Roth IRA for you and a spouse allows up to an additional $17,200 for more tax-free growth (2026, both age 50+).

Solo 401(k) setup and contribution deadlines

Deadlines depend on how the business is taxed. Both tables below are for the 2025 plan year — contributions being made in 2026. The pattern repeats annually; confirm the current year's dates before acting.

C-corp, S-corp & LLC taxed as S-corp (W-2) — S-Corp · C-Corp · LLC/S-Corp

2025 Solo 401k Setup & Contribution Deadlines: C-corporation, S-corporation / LLC taxed as S-Corporation / W-2
Setup deadline	Contribution deadline	Contribution type
December 31, 2025	March 16, 2026, or September 15, 2026 if a timely extension is filed	Employee (pre-tax & Roth); Employer; Voluntary after-tax (Mega Backdoor Roth)
March 16, 2026	March 16, 2026	Employer; Voluntary after-tax (Mega Backdoor Roth) (no longer available at this deadline: Employee (pre-tax & Roth))
September 15, 2026, if a timely extension is filed	September 15, 2026, if a timely extension is filed	Employer; Voluntary after-tax (Mega Backdoor Roth) (no longer available at this deadline: Employee (pre-tax & Roth))

Employee amounts include the age-50+ catch-up contribution — $7,500 for 2025 ($11,250 at ages 60–63).
The W-2 filing deadline is January 31 for expected employee contributions.
March 15, 2026 falls on a Sunday, so the unextended deadline moves to Monday, March 16.

Sole proprietor, single-member LLC & 1099-NEC contractor — Schedule C · 1099-NEC · side-gig · SMLLC

2025 Solo 401k Setup & Contribution Deadlines: Sole Proprietorship / Single-Member LLC taxed as Sole Proprietor / 1099-NEC Independent Contractor
Setup deadline	Contribution deadline	Contribution type
December 31, 2025	April 15, 2026, or October 15, 2026 if a timely extension is filed	Employee (pre-tax & Roth); Employer; Voluntary after-tax (Mega Backdoor Roth)
April 15, 2026	April 15, 2026	Employee (pre-tax & Roth); Employer; Voluntary after-tax (Mega Backdoor Roth)
October 15, 2026, if a timely extension is filed	October 15, 2026, if a timely extension is filed	Employer; Voluntary after-tax (Mega Backdoor Roth) (no longer available at this deadline: Employee (pre-tax & Roth))

Employee amounts include the age-50+ catch-up contribution — $7,500 for 2025 ($11,250 at ages 60–63).
A FIRST-YEAR plan adopted by the unextended filing deadline can still receive prior-year employee deferrals (SECURE 2.0's retroactive first-year deferral rule for sole proprietors — §317 as enacted, §321 of H.R. 2954) — which is why the April 15 row keeps every contribution type open.
The setup deadline refers to the ORIGINAL plan establishment. If you already met it — for example with a pre-existing 'plain vanilla' solo 401k — the plan can be restated and upgraded before the contribution deadline.

Backdoor and Mega Backdoor Roth

Two routes turn after-tax dollars into permanently tax-free growth. The Backdoor Roth IRA operates outside the plan: a non-deductible traditional IRA contribution converted to Roth, available regardless of income limits on direct Roth contributions. The Mega Backdoor Roth operates inside the solo 401(k): voluntary after-tax contributions, above and beyond the employee deferral limit but within the overall annual additions limit, converted to Roth.

Voluntary after-tax contributions are not subject to the employee deferral limit but do count toward the overall contribution limit. Full guide: Roth IRA — Backdoor & Mega Backdoor, withdrawal rules, limits.

Talk it through with a fiduciary

ImpactAdvisor LLC is an independent, fee-only fiduciary RIA in San Francisco; our investment professionals each have 25+ years of experience. Related reading: how RMDs work (solo 401(k) RMDs cannot be aggregated with IRA RMDs), donor-advised funds, and how we work with clients.

Frequently asked questions

Who can open a solo 401(k)?

A business owner with self-employment income and no full-time non-owner W-2 employees. Any entity type qualifies — sole proprietorship, partnership, LLC, S-corporation or C-corporation — and a spouse working in the business can participate too.

How much can I contribute to a solo 401(k)?

The annual additions limit covers employee deferrals, employer profit sharing and voluntary after-tax contributions combined: $69,000 for 2024, $70,000 for 2025, $72,000 for 2026. The age 50+ catch-up is $8,000 for 2026 ($7,500 for 2025), and a participant aged 60 to 63 may use $11,250 instead.

When must a solo 401(k) be set up for the prior tax year?

For a sole proprietor, single-member LLC or 1099-NEC contractor, a 2025-plan-year solo 401k can be established by December 31, 2025, by April 15, 2026, or by October 15, 2026 if a timely extension is filed — but at the extended deadline only employer and voluntary after-tax contributions remain open.

What is the solo 401(k) contribution deadline for an S-corporation?

For a C-corporation, S-corporation or LLC taxed as an S-corporation (W-2), contributions for the 2025 plan year are due March 16, 2026 (March 15 falls on a Sunday), or September 15, 2026 if a timely extension is filed. The W-2 filing deadline is January 31 for expected employee contributions.

Can I still make employee contributions if I set the plan up late?

Not always. At the extended setup deadlines only employer and voluntary after-tax (Mega Backdoor Roth) contributions remain available. One exception: a sole proprietor's FIRST-YEAR plan adopted by the unextended filing deadline (April 15) can still receive prior-year employee deferrals under SECURE 2.0.

What is the Mega Backdoor Roth in a solo 401(k)?

Voluntary after-tax contributions made inside the plan and converted to Roth. They are not subject to the employee deferral limit but do count toward the overall annual additions limit, which is what allows a far larger tax-free contribution than an IRA.

Do solo 401(k) contributions have to come from earned income?

Yes. Contributions must be based on earned income from self-employment, not investment or passive income, and cannot exceed what the business pays you. For an S-corporation, they are based on your W-2 wages rather than pass-through income.

Can I set up a solo 401(k) if I already have a basic one elsewhere?

Yes. The setup deadline refers to the original plan establishment. If that deadline was already met — for example with a pre-existing "plain vanilla" solo 401k — the plan can be restated and upgraded before the contribution deadline.