Solo 401k Tax Credit: Learn How the Government Will Pay You to Open a Solo 401k!
Last Updated 1/4/2026
Open a self-directed solo 401k plan from My Solo 401k Financial today to qualify for a $1,500 government stimulus through a tax credit.
PRO TIP: A tax credit is not merely a deductible expense but a dollar-for-dollar reduction in your business tax liability so it is much more favorable.
- Sign up for a plan by 12/31/2026.
With these tax credits, the ultimate cost to open and maintain a Solo 401k is FREE:
- The $1,500 government stimulus is GREATER than the costs to open and maintain the self-directed Solo 401k for years.
Free Solo 401k Tax Credit – Learn More
What is the $1,500 government stimulus for Solo 401k plans?
A dollar-for-dollar tax credit equal to $500 per year, for a maximum of $1,500 over 3 years
These tax credits were made available under the SECURE Act to encourage retirement savings by self-employed individuals and other small businesses.
- PRO TIP: The tax credit is not based on the costs to set up and maintain the Solo 401k so you are eligible to claim the full credit even if the tax credit is greater than the costs to maintain the Solo 401k.
When is the deadline to claim the credit starting in 2026?
For New Solo 401k Plans
Sign up for a new solo 401k plan by 12/31/2026 to claim tax credits starting in 2026.
Convert Existing Solo 401k Plans
Convert an existing plan by 12/31/2026 to claim tax credits starting in 2026.
What is the cost to open a Solo 401k?
Solo 401k Plan Cost Calculator: The Impact of Tax Credits
Tax Credit vs Tax Deduction
Setting up our Solo 401k qualifies for up to $1500 in tax credits (not a tax deduction!)
What are the eligibility requirements to claim the credit?
• A self-employed person must have a Solo 401k plan like a plan from My Solo 401k Financial with Auto-Contribution feature.
What is an Auto-Contribution feature?
• A Solo 401k plan with an auto-contribution feature has a default 3% contribution percentage and the self-employed business can claim a credit of $500 per year (up to 3 years for a total of $1500) for including an automatic contribution feature in a new or an existing solo 401k plan.
**However, you can opt out of the default 3% contribution amount and then decide to make contributions in whichever amount you prefer including simply making no contributions. In other words, you are not required to make annual solo 401k contributions to qualify for the tax credit**
Are existing Solo 401k plans eligible to claim the credit?
I have an existing Solo 401k plan. Can I add an auto-contribution feature to my existing Solo 401k plan and then claim the credit?
• An Auto-Contribution may be added to an existing plan and then the credit may be claimed.
How do I claim the credit?
• The credit is claimed by filing Form 8881.
Example Scenarios
- Scenario 1: Lindsey is self-employed and has a solo 401k plan. If she amends her plan to add an auto-contribution feature before 12/31/2023 she may claim a $500 tax credit for 2023 and then additional $500 tax credits for 2024 and 2025 as long as she continues to maintain the solo 401k plan with the auto-contribution feature.
- Scenario 2: Brad is a solo attorney with no employees working for him. If he signs up for our Solo 401k by 12/31/2023, he will be able to claim a $500 tax credit for 2023 and then additional $500 tax credits for 2024 and 2025 as long as he continues to maintain the solo 401k plan with the auto-contribution feature.
Lastly, don’t confuse the eligible automatic contribution credit/auto-enrollment tax credit with the Start-up credit. To learn more click here.
