Besides needing to be a self-employed business with no full-time employees other than business owners and their spouses, the only type of employer that is not allowed to sponsor a solo 401k plan is a government employer. I.R.C. 401k(4)(B)(ii). Instead, a government employer can sponsor a 457(b) which is very similar to a 401k in that employee contributions are allowed including Roth contributions. A government employer can be a state or local government. I.R.C. 401)k)(4)(B)(ii)
However, if an individual is a contractor for the government, he or she can open a solo 401k if payment is received via a 1099-NEC . Reason being, contractors are deemed self-employed for solo 401k eligibility purposes.
