Solo 401k

Solo 401k is for owner-only businesses or those with part-time employees only.

Business types such as sole proprietorships, closely held family businesses, partnerships and corporations can take advantage of what the Solo 401k has to offer–maximized savings at a low cost and the flexibility to invest in traditional and alternative investments tax free or by deferring taxes.

Why a Solo 401k?

There are a number of features of the Solo 401k that make it appealing to business owners.

Alternative Assets & Equity Investments

In addition to investing in stocks and mutual funds, our Solo 401k allows you to invest in many types of investments such as real estate, private equity, hedge funds, gold, private loans, and much more–all by writing a check. For a list of investment options click here.

Access to Participant Loans

Solo 401k permits you to take a loan or borrow from your retirement funds. This comes in handy if you have a growing company. Loans can be processed from the Solo 401k at 50% of the account balance but cannot exceed $50,000. To find out more about the loan option visit: Solo 401k Loan​ and Solo 401k Loan Facts.

For example, Gary has an account balance of $200,000. Fifty percent of his account is $100,000; however, the maximum loan that can be taken from a plan is $50,000.

Also, after the loan option has been exhausted, you may qualify to take a hardship withdrawal from the plan, provided certain criteria dedicated by the IRS are met. Please contact us at 800-489-7571 or e-mail us at to find out more about this option.

Roth-Solo 401k

Our Solo 401k permits Roth contributions, also known as after-tax contributions because taxes are paid going in but not going out. Also, Roth 401k contributions are allowable regardless of income level, thereby affording taxpayers, who would not otherwise be eligible, to take advantage of the Roth component. For 2018, you can also contribute up to $55,000 to your Solo 401k, of which $18,500 can be allocated as Roth contributions. For 2019, you can also contribute up to $56,000 to your Solo 401k, of which $19,000 can be allocated as Roth contributions.

CLICK HERE to learn more on how to maximize Roth sol0 401k contributions by making after-tax solo 401k contributions.

Voluntary After Tax  Contributions-Solo 401k

A solo 401k from My Solo 401k Financial also allows for voluntary after-tax contributions which can then allow you take advantage of the “mega back  door roth” transaction.

Following are some of the rules regarding this type of contribution:

  • Voluntary after-tax solo 401k contributions fall under the employee (salary deferral) contribution umbrella.
  • This type of contribution is not considered employer (profit sharing) contributions, so the contribution is not tax deductible because it is considered made with post-tax dollars.
  • When voluntary after-tax solo 401k contributions are converted to a Roth IRA or the Roth Solo 401k, the conversion has to be documented in writing by completing a conversion Form ( the IRS will expect to see a copy of this form upon request), and a Form 1099-R has to be issued to report the conversion whether taxable or not.  This reporting is covered by our annual service and fee.
  • Voluntary after-tax solo 401k contributions can be distributed and thus converted at any time. This is why the conversion of voluntary after-tax solo 401k contributions has been dubbed the “mega-backdoor Roth solo 401k.”
  • There is a lesser known rule called the “overall 415 limits.” The overall 415 limit for 401(k) plans including solo 401k plans. For 2018, the overall limit is $55,000. The overall limit looks at the total annual additions to all of a participant’s accounts in plans maintained by one employer and includes not just their salary deferrals, but also matching contributions, allocations of forfeitures and other amounts. Voluntary after-tax solo 401k contributions are subject to the overall annual limit (“The 415 Limit) $55,000 for 2018.

To learn about the differences between Roth solo 401k contributions and voluntary after-tax contributions VISIT HERE.


SOLO 401(K)