At New Direction Trust Company, Solo 401(k)s are only available to self-employed individuals with no other employees. This allows an account holder to make employee contributions (for a personal tax benefit) and employer contributions (for a business tax benefit) to the same Solo 401(k). In some cases, these contributions will bear the same tax advantages of a Traditional IRA - You defer contributions from your annual income for tax purposes. In other cases, your plan document may allow post-tax Roth contributions (employee contributions only), enabling you to build a tax-free portfolio for the long haul. Your one Solo 401(k) may even permit both types of contribution, again depending on the plan document.
|Tax Year||Annual Contribution Limit |
(below age 50)
|Annual Contribution Limit |
(age 50 or above)
|2019||100% of Compensation up to $19,000||100% of Compensation up to $25,000||December 31st or the year's final paycheck|
|2018||100% of Compensation up to $18,500||100% of Compensation up to $24,500||December 31st or the year's final paycheck|
|Tax Year||Annual Contribution Limit||Contribution Deadline|
|2019||25% of Compensation up to $37,000||April 15th, 2020 (plus extensions)|
|2018||25% of Compensation up to $36,500||April 15th, 2019 (plus extensions)|
By making employee and employer contributions to the same Solo 401(k), you may contribute up to $56,000 ($19,000 employee + $37,000 employer) in 2019 if you're under age 50 ($55,000 in 2018). You may contribute up to $62,000 ($25,000 employee + $37,000 employer) in 2019 if you're age 50 or above ($61,000 in 2018).
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