2024 Solo 401(k) Contribution Limits
For Tax Year 2024, Solo 401(k) plans offer significant contribution opportunities. Below, we break down the elective deferral (employee), profit-sharing (employer), and catch-up contribution limits.
2024 Contribution Limits
For Tax Year 2024 (generally affecting contributions made in 2024, or by your tax-filing deadline in 2025 if you file an extension):
Employee (Elective Deferral) Limit
- Up to $23,000 of your compensation can be contributed on a pre-tax or Roth (after-tax) basis.
- If you're age 50 or older, you can make an additional $7,500 in catch-up contributions, bringing your total elective deferral to $30,500.
Employer (Profit-Sharing) Contribution
- As the employer, you can contribute up to 25% of your net self-employment earnings (or W-2 wages if you're an S-corporation).
- These contributions are typically made on a pre-tax basis, reducing your taxable income.
Overall Maximum (Employee + Employer)
- The combined total of all employee and employer contributions (excluding catch-up) can be as high as $69,000 for 2024.
- If you're eligible for catch-up contributions (50+), your maximum can reach $76,500 (i.e., $69,000 + $7,500 catch-up), subject to your compensation.
How Contributions Work: Two Roles, One Business
In a Solo 401(k), you wear two hats:
- Employee: You can contribute up to the "elective deferral" limit out of your compensation.
- Employer: You can also add a profit-sharing contribution on behalf of your business.
By combining these two roles, you can reach much higher total contributions than with most other self-employed retirement plans (e.g., SEP IRA, SIMPLE IRA).
Catch-Up Contributions (50+)
If you're age 50 or older by December 31 of the tax year, you qualify for additional "catch-up contributions." This is a separate bucket from the overall limit, meaning you can exceed the standard employee deferral cap:
- 2024: $7,500 catch-up
These catch-up amounts can make a significant difference if you're looking to supercharge your retirement savings in your 50s or beyond.
Deadlines & Timing
Employee Deferrals
Must be elected by December 31, 2024. Many providers require that the deferral be deposited as soon as administratively possible (commonly within a few weeks of payroll or year-end).
Employer (Profit-Sharing) Contributions
Can be made until your business's 2024 tax-filing deadline, including extensions. For S-corps or sole proprietorships, that could mean contributions are due by March 15 or April 15, 2025, unless you file an extension (which can push the deadline to September or October 2025).
Plan Setup Deadline
To make 2024 contributions, you must establish your Solo 401(k) plan by December 31, 2024. Check with your provider for specific documentation requirements and processing times.
Key Factors Influencing Your 2024 Contribution
- Your Net Income / W-2 Wages: The higher your compensation, the easier it is to maximize contributions.
- Business Structure: If you're an S-corp, your employee deferrals are based on your W-2 salary, while profit-sharing is based on that same salary. As a sole proprietor, it's based on net profit from Schedule C, minus certain adjustments.
- Age 50+ Status: Being 50 or older lets you add the $7,500 catch-up contribution on top of the standard limit.
- Plan Provisions: Some providers require you to specifically elect Roth or pre-tax each year. Ensure your adoption agreement allows for both if you want maximum flexibility.
2024 Contribution Examples
Under Age 50
- Elective Deferral: $23,000
- Profit-Sharing: $20,000 (assume 25% of $80,000 net self-employment income)
- Total: $43,000 (still well under the $69,000 overall limit, so you could contribute even more if your income supports it)
Age 50+
- Elective Deferral: $23,000
- Catch-Up: $7,500
- Profit-Sharing: $25,000 (assume 25% of $100,000 net self-employment income)
- Total: $55,500 (still under the $76,500 overall limit including catch-up)
Frequently Asked Questions
What if I also have a day job with a 401(k)?
Your combined employee elective deferrals across all 401(k) plans cannot exceed $23,000 in 2024 ($30,500 if age 50+). However, each employer's contributions are separate, so you can still receive matching at your day job and make profit-sharing contributions to your Solo 401(k).
Can I mix Roth and pre-tax contributions in 2024?
Yes, if your plan allows it. The $23,000 employee deferral limit applies to the combined total of Roth and pre-tax contributions. You can split this amount however you prefer between the two types.
What if my income varies throughout the year?
You can adjust your contribution rates as needed, but ensure your total employee deferrals don't exceed the annual limit. For profit-sharing, you'll typically calculate the final amount after your books are closed for 2024.
Next Steps for 2024
1. Plan Your Contributions: Use our 2024 Contribution Calculator to estimate your maximum contribution potential.
2. Set Up Your Plan: If you haven't already, establish your Solo 401(k) before December 31, 2024.
3. Choose a Provider: Compare options on our Providers page to find the best fit for your needs.
4. Mark Key Dates: Set reminders for contribution deadlines and required documentation.