Solo 401k Eligibility

1. Self-Employed Individuals

• You must have earned income from a trade or business in which you operate as the owner (or sole proprietor).
• This includes freelancers, consultants, independent contractors, and "gig" workers.

2. Small-Business Owners With No Employees

• Your business can't have any full-time employees (other than a spouse).
• "Full-time" generally means working 1,000 or more hours per year.

3. Spouse Employees

• If your spouse works in your business, they can also participate in the plan, effectively doubling household contributions.
• No non-spouse, full-time employees are allowed if you want to maintain Solo 401k status.

Sole Proprietorship

Operate under your personal name or a "doing business as" (DBA).

Single-Member LLC

The LLC is taxed as a disregarded entity (i.e., similar to a sole proprietor).

Multi-Member LLC or Partnership

Each partner/LLC member can open their own Solo 401k if they have no employees under them (other than a spouse).

Often more complex—consult with a CPA or financial advisor.

S-Corporation

You pay yourself a salary (W-2), and your Solo 401k contributions are based on that salary.

C-Corporation

Less common, but still possible, provided you and your spouse are the only employees.

1. What if I have a side gig in addition to my regular job?

If you're employed full-time by someone else (and possibly covered by their 401k plan), you can still open a Solo 401k for your side business. However, your total contributions across all employer plans (including the Solo 401k) must stay within IRS annual limits.

2. Can I hire independent contractors without losing Solo 401k eligibility?

Yes. Independent contractors (paid via 1099) are not considered W-2 employees. As long as you do not bring on a W-2 employee who works 1,000+ hours per year, you generally remain eligible.

3. If I have part-time or seasonal employees, am I still eligible?

Potentially. It depends on how many hours they work and other factors (like how many years they've worked for you). Under current rules, employees must typically work at least 1,000 hours per year for you to be required to offer them participation in a 401k. Consult your provider to clarify the specifics, as IRS regulations can change.

4. What if my spouse works in the business?

That's allowed. Your spouse can contribute to the same Solo 401k plan, often doubling total contributions. You'll need to ensure they receive legitimate compensation from the business (i.e., they're on payroll or otherwise have earned income).

5. What if I hire a non-spouse employee later?

If you hire a full-time W-2 employee who's not your spouse, you'll generally need to transition from a Solo 401k to a regular 401k plan that includes coverage for your new employee(s). There may be a grace period, depending on the plan rules and how quickly your employee becomes eligible, but be prepared to update your retirement plan accordingly.

1. Verify Your Business Status

• Make sure your business formation and any employees are correctly classified.
• Confirm you meet the "no non-spouse full-time employee" rule.

2. Choose a Solo 401k Provider

If you're eligible, check out our Provider Comparisons to find a Solo 401k solution that fits your needs.

3. Review Contribution Limits

Visit our Contribution Limits page to learn how much you can set aside each year.

4. Consult an Expert

If you have questions about your unique situation—especially if you have a multi-member LLC, partnership, or plan to hire employees—consider talking to a CPA or financial advisor.

Your go-to overview of Solo 401ks, covering plan features, benefits, and how they differ from other retirement plans.

Dive into more detailed questions about specific Solo 401k scenarios, from rollovers to in-plan Roth conversions.