The solo 401(k) is one of the most powerful retirement planning & tax savings tools for solopreneurs operating as a single-member LLC or S-Corporation. It combines high contribution limits with flexible tax benefits, but deadlines matter.
Missing a contribution window means missing out on deductions, compounding growth, and long-term financial security. That’s why staying ahead of solo 401(k) deadlines is crucial to your business-of-one strategy.
Besolo’s integrated platform helps you plan, contribute, and manage your solo 401(k) on autopilot, ensuring you are always aligned with IRS requirements and retirement goals.
Solo 401(k) contribution limits for 2025 and 2026
Solo 401(k) plans allow you to contribute as an employee and employer, creating a powerful tool to accelerate retirement savings. For 2025:
- The employee deferral limit increases to $23,500, with an additional $7,500 allowed in catch-up contributions for those aged 50 and older
- Employers can contribute up to 25% of compensation
- The total cap for 2025 is $70,000, or $77,500 with catch-up contributions (over 50 years old).
Many solopreneurs experience fluctuating income throughout the year, which makes it challenging to plan fixed monthly contributions. Instead, many choose to make lump-sum contributions closer to year-end based on final profits. Employer contributions offer additional flexibility, including extensions, since they can be made until the tax filing deadlines. This allows you to review your business’s financial performance and maximize deductible contributions without overcommitting early.
While the IRS hasn’t released official limits for 2026, incremental increases are expected. Strategic planning can help you stay under the cap and avoid overcontribution penalties, especially if your income varies throughout the year.
Solo Roth 401(k) and after-tax contributions
A solo Roth 401(k) allows independent professionals to make retirement contributions with after-tax dollars. Unlike traditional Solo 401(k) plans, where taxes are deferred until withdrawal, Roth contributions grow tax-free and the qualified distributions in retirement. This can be a smart strategy if you expect your tax rate to rise in the future.
In addition to Roth deferrals, some plans allow after-tax, non-Roth contributions beyond the employee deferral limit. While these contributions don’t reduce your current tax bill, they can be converted to Roth funds through a strategy known as the mega backdoor Roth.
These contribution types can maximize retirement flexibility and tax diversification. Solopreneurs can evaluate different retirement plans that support pre-tax and after-tax strategies to build long-term savings more effectively.
What if I contributed too much to a solo 401(k)?
Exceeding the contribution limit can lead to double taxation and penalties. If you over-contribute, notify your plan provider as soon as possible. You typically have until April 15 of the following year to withdraw the excess amount and avoid additional tax consequences.
Uncorrected overages are taxed twice, once when contributed and again when withdrawn. Errors may also trigger IRS scrutiny or plan disqualification.
One-participant 401(k) plans must follow specific correction procedures for excess deferrals, which vary depending on the type and timing of the contribution. Avoiding these issues starts with accurate tracking and reliable plan administration. Automated solutions like Besolo help you stay within limits and ahead of deadlines.
How to open a solo 401(k)
Opening a solo 401(k) starts with choosing a provider that supports one-participant plans. Most banks, brokerages, and online platforms offer solo 401(k) accounts, but not all support Roth or after-tax contributions. Before selecting one, confirm whether it supports your preferred plan features and investment options.
Your plan must be established by December 31 to contribute to the current tax year, even if you fund it later. Setup includes adopting a written plan document, obtaining an EIN, and opening a dedicated account for the plan.
Besolo’s integrated solo 401(k) setup and contribution tools streamline the process from end to end. You get automated contributions, employer-employee split tracking, and CPA-backed guidance, so you can focus on growth while your retirement plan runs in the background.
Additional considerations for managing a solo 401(k)
Opening your solo 401(k) is just the beginning. Ongoing management helps you stay compliant and make the most of your tax-advantaged savings. Since business income can vary, your contributions should reflect current earnings and projected cash flow.
Mid-year adjustments can help optimize tax impact. If revenue unexpectedly increases, you can adjust your contribution strategy accordingly, deferring more as an employee or increasing employer contributions later in the year. Monitoring your income trends quarterly makes these shifts more proactive rather than reactive.
You’ll also need to track cumulative contributions if you operate multiple businesses. Even if each business has its own EIN, your total elective deferrals across all plans are subject to the annual IRS limits. Learning these aggregation rules prevents accidental over contributions and keeps your filings clean.
Regularly reviewing your salary (for S-Corps) or net earnings (for sole proprietors) helps you calculate contributions accurately. Employer contributions can be made until your tax filing deadline, giving you flexibility as your business evolves.
Besolo’s integrated admin tools for solopreneurs help you track income, automate retirement contributions, and stay compliant without the busywork.
Build your retirement strategy with confidence and clarity while simplifying your business of one
Solo 401(k) plans offer more than high contribution limits. They provide a way to control your financial future as a business-of-one. However, maximizing those benefits depends on knowing your deadlines, understanding contribution rules, and managing your plan proactively. Every decision shapes your long-term savings, from staying under annual caps to correcting overages and choosing between Roth, traditional, or after-tax contributions.
With Besolo, solopreneurs don’t have to navigate these decisions alone. Our integrated retirement tools are built into the self-employment OS, making it easy to plan, contribute, and stay compliant year-round. Everything syncs in real-time, whether you’re running payroll, adjusting compensation, or projecting income for the next quarter.
We do more than automate contributions. Besolo tracks your earnings, forecasts your retirement limits, and alerts you when deadlines approach, eliminating guesswork and reducing your risk of penalties. Plus, we help you structure your salary if you operate as an S-Corp so you can contribute as an employer and employee with precision.
When you’re ready to scale your retirement savings and streamline your back office, Besolo gives you the tools to build a resilient future. Set your solo 401(k) on autopilot and stay focused on what matters most—growing your business.
Get started with Besolo’s Solo LLC and Solo S Corp options today!
