Solo 401 K Calculator

Solo 401(k) Maximum Contribution Calculator

Your maximum Solo 401(k) contribution will appear here.

function calculateSolo401k() { var netSelfEmploymentIncome = document.getElementById("netSelfEmploymentIncome").value; var age = document.getElementById("age").value; var resultDiv = document.getElementById("solo401kResult"); // Validate inputs if (isNaN(netSelfEmploymentIncome) || netSelfEmploymentIncome === "" || parseFloat(netSelfEmploymentIncome) < 0) { resultDiv.innerHTML = "Please enter a valid positive number for Net Self-Employment Income."; return; } if (isNaN(age) || age === "" || parseInt(age) = 50) { maxEmployeeDeferral += CATCH_UP_EMPLOYEE; } // Employee deferral cannot exceed net self-employment income maxEmployeeDeferral = Math.min(maxEmployeeDeferral, income); // Step 2: Calculate Max Employer Contribution (Profit Sharing) // For self-employed, the employer contribution is limited to 25% of "compensation". // "Compensation" for this purpose is Net Self-Employment Earnings minus one-half of self-employment taxes. // A common shortcut for the maximum employer contribution when maximizing both is 20% of the original Net Self-Employment Income. maxEmployerContribution = income * EMPLOYER_RATE_EFFECTIVE; // Step 3: Calculate Total Contribution before overall limit totalContribution = maxEmployeeDeferral + maxEmployerContribution; // Step 4: Apply Overall Contribution Limit var overallMax = OVERALL_LIMIT; if (userAge >= 50) { overallMax += CATCH_UP_OVERALL; } var finalTotalContribution = Math.min(totalContribution, overallMax); // Step 5: Adjust individual contributions if overall limit was hit // Employee deferral is generally prioritized. If the total exceeds the overall limit, // the employer contribution is reduced. finalEmployeeContribution = maxEmployeeDeferral; finalEmployerContribution = finalTotalContribution – finalEmployeeContribution; // Ensure employer contribution isn't negative (e.g., if employee deferral alone hits overall limit) if (finalEmployerContribution < 0) { finalEmployerContribution = 0; finalEmployeeContribution = finalTotalContribution; // Adjust employee if employer is zeroed out } // Ensure employee contribution doesn't exceed income finalEmployeeContribution = Math.min(finalEmployeeContribution, income); // Re-calculate total based on potentially adjusted employee contribution finalTotalContribution = finalEmployeeContribution + finalEmployerContribution; resultDiv.innerHTML = "

Your Estimated Maximum Solo 401(k) Contribution for " + new Date().getFullYear() + ":

" + "Total Max Contribution: $" + finalTotalContribution.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "" + "• Employee Contribution (Elective Deferral): $" + finalEmployeeContribution.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "" + "• Employer Contribution (Profit Sharing): $" + finalEmployerContribution.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "" + "(Based on " + new Date().getFullYear() + " IRS limits. Consult a financial advisor for personalized advice.)"; }

Understanding the Solo 401(k)

A Solo 401(k), also known as an Individual 401(k) or Uni-401(k), is a powerful retirement savings plan designed specifically for self-employed individuals and small business owners with no full-time employees other than themselves or their spouse. It offers significantly higher contribution limits compared to other self-employed retirement plans like a SEP IRA, making it an excellent tool for maximizing tax-advantaged savings.

Who is Eligible?

You are eligible for a Solo 401(k) if you are self-employed (e.g., a freelancer, independent contractor, or sole proprietor) or own a business with no full-time employees other than yourself and/or your spouse. If you have full-time employees (excluding your spouse), you generally cannot open a Solo 401(k).

How Solo 401(k) Contributions Work

The Solo 401(k) allows you to contribute to your retirement in two capacities: as both an employee and an employer. This dual role is what enables the high contribution limits.

• Employee Contributions (Elective Deferrals): As an employee, you can contribute up to 100% of your net self-employment income, up to the IRS annual limit. For 2024, this limit is $23,000. If you are age 50 or older, you can make an additional catch-up contribution of $7,500, bringing your total employee contribution to $30,500.
• Employer Contributions (Profit Sharing): As the employer, you can make a profit-sharing contribution of up to 25% of your "compensation." For self-employed individuals, "compensation" is generally your net self-employment earnings after deducting one-half of your self-employment taxes and your employee contributions. This effectively works out to about 20% of your net self-employment income before these deductions.

Overall Contribution Limit

There's an overall limit to the combined employee and employer contributions you can make to your Solo 401(k) in a given year. For 2024, the overall limit is $69,000. If you are age 50 or older, you can contribute an additional catch-up amount of $7,500, bringing the total overall limit to $76,500.

It's important to note that your total contributions cannot exceed your net self-employment income for the year.

How This Calculator Works

This calculator helps you estimate your maximum Solo 401(k) contribution based on your net self-employment income and age. It applies the current IRS limits for employee deferrals, employer profit-sharing, and the overall contribution cap. The calculator prioritizes the employee contribution first, then adds the employer contribution, ensuring the total does not exceed the overall IRS limit for your age group.

Important Considerations

• Net Self-Employment Income: This is your gross income from your business minus all eligible business expenses. It's the figure from which your contributions are derived.
• Tax Deductions: Both employee and employer contributions to a traditional Solo 401(k) are generally tax-deductible, reducing your taxable income.
• Roth Solo 401(k): Some Solo 401(k) plans offer a Roth option for employee contributions, allowing for tax-free withdrawals in retirement. Employer contributions are always pre-tax.
• Professional Advice: While this calculator provides a helpful estimate, tax laws and retirement planning can be complex. Always consult with a qualified financial advisor or tax professional to ensure you are maximizing your contributions correctly and in accordance with your specific financial situation.