Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
What is Solo 401(k)?
The owner contributes twice: as employee, an elective deferral up to the annual limit ($24,500 in 2026, pre-tax or Roth), and as employer, a profit-sharing contribution based on self-employment compensation. Usually allows larger contributions than a SEP at the same income.
Solo 401(k): a worked example
A self-employed designer defers $24,500 as the employee and adds a profit-sharing contribution as the employer.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
SEP IRA
An employer-funded IRA plan, up to 25% of compensation.
All Retirement Plans, Accounts & Trading terms · Full glossary