One of the most common questions we get every year is: how much can my business contribute to my Solo 401k? The answer depends on your business structure, your earned income, and the annual IRS contribution limits. This post breaks down employer profit-sharing contributions — also known as business or employer contributions — for tax year 2026, including how the calculation changes depending on whether your self-employed business is a sole proprietorship, an S-corporation, a C-corporation, or a partnership.A Solo 401k (also called an individual 401k, single-K, or self-employed 401k) is a 401k plan built for owner-only businesses. One of its biggest advantages is that it allows for multiple contribution types: employee salary deferral contributions, voluntary after-tax contributions, and employer profit-sharing contributions. This article focuses on that last category — how much your business itself can contribute on your behalf.
Important — There’s Still Time for 2025 Employer Contributions: Thanks to SECURE Act 2.0, the deadline to both establish a Solo 401k plan and make employer profit-sharing contributions for the prior tax year was extended to your business tax return due date, plus any timely filed extension. If your self-employed business is an S-corporation and you filed a 2025 tax return extension, you have until September 15, 2026 to open and fund a Solo 401k for 2025. If your business is a sole proprietorship, you have until October 15, 2026.
2026 Solo 401k Contribution Limits
For tax year 2026, the overall contribution limit to a Solo 401k plan is $72,000. This overall limit applies to the combined total of employee contributions, employer contributions, and voluntary after-tax contributions (catch-up contributions are separate and are never considered employer contributions).
| Contribution Type |
2026 Limit |
| Employee salary deferral |
$24,500 |
| Catch-up contribution (age 50+) |
$8,000 |
| Super catch-up contribution (ages 60–63) |
$11,250 (instead of the standard catch-up, not both) |
| Overall Solo 401k limit (employee + employer + voluntary after-tax) |
$72,000 |
How Employer Profit-Sharing Contributions Are Calculated
The IRS allows one-participant 401k plans (Solo 401k plans) to accept employer profit-sharing contributions of up to 25% of compensation, though the actual formula used to get there depends entirely on how your business is taxed. Special calculations apply for self-employed individuals. Here’s how the calculation breaks down by entity type:
| Business Structure |
Employer Contribution Formula |
| Sole proprietorship / single-member LLC taxed as a sole proprietorship |
20% of adjusted net self-employment income (Schedule C, Line 31, minus one-half of self-employment tax) |
| S-corporation or C-corporation (or LLC taxed as either) |
25% of gross W-2 wages (Box 1) |
| Partnership / LLC taxed as a partnership |
20% of adjusted self-employment earnings (Schedule K-1, Line 14, Code A, minus one-half of self-employment tax) |
Example — S-Corporation: If you report $100,000 of W-2 wages (Box 1) from your self-employed S-corporation, your maximum employer profit-sharing contribution is $100,000 × 25% = $25,000. You cannot contribute more than 25% of your W-2 wages as an employer contribution, whether made pre-tax or as a Roth Solo 401k employer contribution.
Example — Sole Proprietorship / Partnership: Take your Schedule C, Line 31 income (or Schedule K-1, Line 14, Code A for a partnership), subtract one-half of self-employment tax, then multiply the result by 20%. My Solo 401k Financial’s online
Solo 401k contribution calculator performs this calculation for you automatically.
You Need W-2 Wages to Support an S-Corp Contribution
Warning: Even though an employer profit-sharing contribution is deductible on your business tax return, you must have the W-2 wages to support it. If your S-corporation only reports $10,000 of W-2 wages, your maximum employer profit-sharing contribution is $10,000 × 25% = $2,500 — not $25,000. Solo 401k contributions for an S-corp are driven entirely by Box 1 gross wages, so make sure your payroll supports the contribution you’re planning to make.
Can Employer Contributions Be Made as Roth?
Yes — and you have SECURE Act 2.0 to thank for that. Traditionally, employer profit-sharing contributions are made pre-tax so the business receives a tax deduction. Under SECURE Act 2.0, Solo 401k plans offered by providers like My Solo 401k Financial can also accept employer Roth Solo 401k contributions.
Info Highlight: An employer Roth Solo 401k contribution is deductible on the business tax return, but it’s treated as a
taxable in-plan conversion on your personal return. Because of this, most clients skip employer Roth contributions and instead use the
Mega Backdoor Roth strategy: making voluntary after-tax Solo 401k contributions and immediately converting them to a
Roth Solo 401k or
Roth IRA. Voluntary after-tax contributions are calculated dollar-for-dollar rather than as a percentage of compensation, which typically allows for a much larger Roth conversion opportunity than an employer Roth contribution would.
Spousal Contributions Can Double Your Household Savings
If your spouse works in your business and earns compensation from it, he or she doesn’t need to be an owner to participate. Your spouse can join the same Solo 401k plan — it remains one plan sponsored by the business, not a second plan — and can make his or her own employee, employer, and voluntary after-tax contributions, each subject to the same 2026 limits.
In a two-participant plan (both spouses), each spouse typically has three separate holding accounts (pre-tax, Roth, and voluntary after-tax), for a total of six accounts. My Solo 401k Financial can help set these up at Fidelity, Schwab, or another brokerage or bank of your choosing.
Contributing to Your Solo 401k While Also Having a Day-Job 401k
Many self-employed individuals also work a W-2 day job with its own 401k. Here’s how the rules interact:
| Contribution Type |
Aggregated Across Both Plans? |
| Employee salary deferral ($24,500 for 2026) |
Yes — shared across all 401k plans you contribute to |
| Employer profit-sharing contribution |
No — calculated separately for your Solo 401k |
| Voluntary after-tax contribution |
No — calculated separately for your Solo 401k |
In other words, even if you’ve maxed out your day-job 401k, you can still make full employer profit-sharing and voluntary after-tax contributions to your Solo 401k, up to the overall $72,000 limit for 2026.
Eligibility: Who Can Have a Solo 401k?
A Solo 401k is for owner-only businesses, meaning you generally cannot have any non-owner, full-time common-law employees who work 1,000+ hours per year. There are a few exceptions: a working spouse (does not need to be an owner), independent contractors, and any employee under age 21, regardless of hours worked.
Important — Ongoing Eligibility Rules: Under SECURE Act 2.0’s long-term part-time employee rule, if you hire a non-owner, non-spouse W-2 employee who works between 500 and 999 hours for two consecutive years, you’ll need to close the Solo 401k, transfer it to an IRA, or convert it to a full employer 401k plan after that two-year period. The same applies if a W-2 employee works 1,000+ hours in any 12-month period.
EIN Reporting: Solo 401k vs. Business EIN
Info Highlight: A Solo 401k is a separate legal trust with its own EIN — you do not use your business EIN to open the holding accounts. That Solo 401k EIN is used for Form 1099-R reporting (for example, when processing a Mega Backdoor Roth conversion). However, once your Solo 401k’s market value exceeds $250,000, you’ll file an informational Form 5500-EZ using your business EIN, not the Solo 401k’s EIN.
New for 2026: Mandatory Roth Catch-Up Contributions
Important — Effective January 1, 2026: Under new SECURE Act 2.0 regulations, if your self-employed business is taxed as an S-corporation or C-corporation and your 2025 Form W-2, Box 3 (Social Security wages) was $150,000 or more, your catch-up and super catch-up contributions must be made as Roth Solo 401k contributions — they can no longer be made pre-tax. This rule does not apply to sole proprietorships or partnerships, and it does not apply in the first year a new S-corp or C-corp is established, since there’s no prior-year W-2 to reference.
Key Takeaways
| Topic |
2026 Takeaway |
| Overall Solo 401k limit |
$72,000 (not counting catch-up contributions) |
| Sole prop / partnership employer contribution |
20% of adjusted net self-employment income |
| S-corp / C-corp employer contribution |
25% of W-2 wages (Box 1) |
| Earned income requirement |
No W-2 wages or self-employment income means no contributions of any kind |
The bottom line: how much your business can contribute to your Solo 401k depends on your business structure and your earned income. Understanding the right formula for your entity type — and keeping your W-2 wages or self-employment income properly documented — is essential to maximizing your employer profit-sharing contribution each year.
About the $1,500 Auto-Contribution Tax Credit
My Solo 401k Financial was the first provider in the industry to offer the auto-contribution feature, which qualifies eligible plans for a tax credit under the SECURE Act. The credit is claimed as $500 per year for three consecutive years (a total of $1,500), filed using Form 8881, and can help offset the cost of maintaining a Solo 401k.
