IRS Rules Explained: Open a Schwab Solo 401(k) in 2026 and Still Fund for 2025

Watch: You still have time to open a solo 401k in 2026 and make certain types of year 2025 solo 401k contributions

Many self-employed professionals assume that once the calendar year ends, the door is closed on making prior-year Solo 401(k) contributions. Fortunately, that’s not always true.

Thanks to IRS rules clarified under SECURE Act 2.0, it is still possible in 2026 to open a Solo 401(k) and make certain 2025 contributions, depending on how your business is taxed. This article explains how the rules work, which contributions are still allowed, and how you can use MySolo401k Financial’s plan documents with Charles Schwab as the brokerage.

It’s Not Too Late to Open a Solo 401(k) in 2026 for 2025

The IRS allows self-employed individuals to adopt a Solo 401(k) plan after year-end and still make certain prior-year contributions, as long as the plan is established by the business tax return due date, including extensions.

However, the types of contributions you can make depend entirely on your entity type:

S-corporation
Sole proprietorship / single-member LLC
Partnership

Understanding these differences is critical to avoiding missed opportunities—or costly mistakes.

Using MySolo401k Financial + Schwab

When you open a Solo 401(k) with MySolo401k Financial, you are not limited to Schwab’s basic Solo 401(k) plan.

Instead:

MySolo401k Financial provides the IRS-compliant plan documents, plan updates, and compliance support
Charles Schwab holds the funds in Company Retirement Brokerage Accounts
You maintain full control over investments

This structure allows for advanced strategies that Schwab’s off-the-shelf Solo 401(k) does not support, including:

Voluntary after-tax contributions (Mega Backdoor Roth)
Participant loans
Auto-contribution tax credit
Alternative investments

Contribution Rules by Entity Type

S-Corporations

If your business is taxed as an S-corporation and you open a Solo 401(k) for the first time in 2026, you can still make 2025 contributions, but with limits:

Allowed in 2026 for 2025

Employer profit-sharing contributions
Voluntary after-tax Solo 401(k) contributions

Not allowed

Employee salary deferrals (unless the plan was adopted by 12/31/2025)

Deadlines

March 15, 2026 (or September 15, 2026 with Form 1120-S extension)

Sole Proprietors & Single-Member LLCs

This is where the rules are most flexible.

If your business is taxed as a sole proprietorship or single-member LLC, you may open a Solo 401(k) in 2026 and still make all 2025 contribution types.

If plan is opened by April 15, 2026

Employee contributions
Employer contributions
Voluntary after-tax contributions

If you extend your personal return to October 15, 2026

Employer contributions
Voluntary after-tax contributions

Not allowed

Employee salary deferrals (unless the plan was adopted by 12/31/2025)

Partnerships & LLCs Taxed as Partnerships

For partnerships, the rules mirror S-corporations:

Allowed in 2026 for 2025

Employer contributions
Voluntary after-tax contributions

Not allowed

Employee contributions (unless plan was adopted by 12/31/2025)

Deadlines

March 15, 2026 (September 15, 2026 with Form 1065 extension)

Mega Backdoor Roth Using Charles Schwab in Conjunction with My Solo Solo 401k Financial

One of the most powerful reasons clients open a Solo 401(k) in 2026 for 2025 is to execute a Mega Backdoor Roth.

With a MySolo401k Financial plan:

You make voluntary after-tax Solo 401(k) contributions
Those funds are held in a separate after-tax Schwab brokerage account
The funds are then converted to:
- Roth Solo 401(k), or
- Roth IRA

Because after-tax contributions are not deductible, the conversion is largely tax-free when done promptly.

Schwab cannot support this strategy on its own—MySolo401k Financial handles the plan design and IRS reporting (including Form 1099-R).

Roth Solo 401(k) Advantage After SECURE Act 2.0

Another major update: Roth Solo 401(k)s are no longer subject to Required Minimum Distributions (RMDs).

This makes converting after-tax funds to a Roth Solo 401(k) especially attractive for:

High-income self-employed individuals
Those consolidating retirement accounts
Long-term tax-free growth planning

Auto-Contribution Tax Credit (Up to $1,500)

MySolo401k Financial plans are drafted to support the auto-contribution tax credit, which Schwab’s Solo 401(k) does not offer.

Key points:

Up to $1,500 total over three years
Claimed using Form 8881
$500 per year credit
You can qualify even if you opt out of contributing

This credit can offset most—or all—of the cost of setting up and maintaining a Solo 401(k).

Final Thoughts

Opening a Solo 401(k) in 2026 does not mean you’ve missed your chance to fund 2025 retirement contributions. With proper planning—and the right plan documents—you can still: