The Solo 401(k) contribution limit for 2024 is up to $69,000. For those aged 50 or older, an additional catch-up contribution of $7,500 is permitted, bringing their total possible contribution to $76,500.
Understanding Solo 401(k) Contribution Types
A Solo 401(k) is a powerful retirement plan designed for self-employed individuals and small business owners with no full-time employees other than themselves or a spouse. It uniquely allows participants to make contributions in two capacities: as both an employee and an employer.
- Employee Contributions (Elective Deferral): As an "employee," you can contribute up to the maximum elective deferral limit set by the IRS for 401(k) plans. For 2024, this limit is $23,000.
- Employer Contributions (Profit-Sharing): As the "employer," your business can make a profit-sharing contribution. This is generally limited to 25% of your net self-employment earnings (or 25% of compensation for a corporation).
The sum of your employee and employer contributions cannot exceed the overall Solo 401(k) limit for the year.
Solo 401(k) Contribution Limits for 2024
The table below summarizes the key contribution limits for Solo 401(k) plans in 2024:
| Contribution Type | Limit for 2024 |
|---|---|
| Total Contribution | $69,000 |
| Catch-up (Age 50+) | +$7,500 |
This means that an individual age 50 or older could potentially contribute a combined maximum of $76,500 in 2024, comprised of the $69,000 general limit plus the $7,500 catch-up amount.
Important Considerations
- Catch-up Contributions: The catch-up contribution is specifically for individuals who are age 50 or older by the end of the calendar year for which contributions are being made.
- Earned Income Basis: All contributions to a Solo 401(k) are based on your net self-employment income after deductions (or W-2 income if your business is incorporated). You cannot contribute more than your earned income for the year.
- Contribution Deadlines: Employee contributions typically must be made by the end of the calendar year, while employer contributions can generally be made up until your tax filing deadline, including extensions.
- Official IRS Information: For comprehensive and official details on retirement plan limits, including Solo 401(k)s, always refer to the Internal Revenue Service (IRS) website. The IRS publishes annual updates on these limits.
