Choosing Your Solo 401(k) Provider

Self employed business owner and her solo 401k

If you're self-employed or a small business owner with no employees (other than a spouse), a Solo 401(k) is one of the most powerful retirement savings tools available. Choosing the right provider is an important decision. In this guide, we’ll explore what to look for in a provider and how we can help you set up and manage your Solo 401(k) plan.

What to Look for in a Solo 401(k) Provider

Selecting a Solo 401(k) provider involves more than just picking a company that offers retirement accounts. Consider these 3 following factors:

Investment Options – Each provider have different selections of investment options.
Plan Costs and Fees – Some providers charge setup fees, annual fees, or transaction fees. Understanding the cost structure is important to understand when setting up your plan.
Roth and Loan Options – If you want to make Roth contributions (after-tax) or take a loan from your plan, ensure the provider supports these features.

Understanding Solo 401(k) Plans

A Solo 401(k) is designed specifically for self-employed individuals and small business owners without full-time employees. It offers significant tax advantages, high contribution limits, and flexible investment options. With a Solo 401(k), you can contribute both as an employer and an employee, allowing you to maximize your retirement savings. Additionally, these plans may include Roth contributions and loan provisions, making them a versatile option for long-term financial planning. Solo 401(k) plans do have some administrative requirements as well. If the assets exceed $250,000 at year end, you may need to file form 5500-EZ. Plans with fewer assets may be exempt from filing.

Contribution Limits For Solo 401(k) Plans

For 2025, the contribution limits for a Solo 401(k) are:

Employee Contributions: Up to $23,500 ($31,000 if age 50 or older).
Employer Contributions: Up to 25% of compensation (or net self-employment income) with a total combined limit of $70,000 ($77,750 if age 50 or older). If you are between ages 60-63, the total combine limit is $81,250.

These high limits make a Solo 401(k) one of the most attractive retirement savings vehicles for self-employed individuals.

Loan Provisions For Solo 401(k) Plans

A key advantage of many Solo 401(k) plans is the ability to take a loan from your account. Participants can typically borrow up to 50% of their account balance, up to a maximum of $50,000. The loan must generally be repaid within five years with interest, but it provides financial flexibility in case of emergencies.

How We Can Help You Set Up a Solo 401(k)

As a financial advisor specializing in retirement planning for self-employed professionals, we offer personalized assistance in establishing and managing Solo 401(k) plans. With several options to choose from, our services include:

Customized Plan Selection – Helping you choose the best Solo 401(k) structure based on your financial goals and investment preferences.
Plan Setup and Administration – Assisting with paperwork and ongoing plan management.
Investment Guidance – Providing insights on risk tolerance assessment and investment strategy.
Ongoing Support – Ensuring you make informed financial decisions.
Financial Planning – We offer our clients holistic financial planning services for all aspects of their financial lives.

Alternatives to a Solo 401(k)

There are several alternatives to Solo 401(k) plans each with their own advantages and disadvantages. They are as follows:

SEP IRA – Easy to establish with high contributions limits which are up to 25% of the employees total income up to $70,000 for 2025.
Traditional IRA or Roth IRA – Easy to establish but with lower contribution levels of $7,000 but, if you are 50 and older, the limit is $8,000 for 2025.
Simple IRA – More ideal for businesses with 100 or less employees. Contribution limits for 2025 are $16,500 but, if you are 50 or older you can contribute up to $20,000. Ages 60-63 can contribute up to $21,750.

For more information about alternatives, click here.

Final Thoughts

A Solo 401(k) is an excellent retirement vehicle for self-employed individuals, offering high contribution limits and tax benefits. Choosing the right provider is an important decision when it comes to managing your retirement savings. If you're interested in setting up a retirement plan for your business, we can provide the guidance and expertise needed to tailor a plan that aligns with your unique financial goals. Contact us by clicking the link below to start planning for your financial future.

Speak To A Financial Advisor Today!

HunterRIDGE Wealth Management is Long Island's premier wealth management firm. From growing wealth to planning for retirement, we are with you every step of the way. To learn more about how we work with our clients and our planning process click here.

For educational purposes only. Not to be relied upon as financial, tax, or legal advice.

This information was obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness, or fairness. We have relied upon and assumed without independent verification the accuracy of all information available from public sources.