How much can I contribute to a Solo 401(k)?
Last updated August 2026
Short answer
The arithmetic differs depending on whether your business pays you W-2 wages or you are taxed as a sole proprietor, and that difference is worth several thousand dollars.
The employee half
$24,500 in 2026, in pre-tax or Roth form, and it does not depend on the business being profitable beyond covering the compensation.
This is the part that makes the plan better than a SEP at moderate income, because a percentage of a small profit is a small number.
It is shared with any other employer's plan you participate in during the year.
The employer half
Up to 25% of compensation, where compensation is counted up to $360,000 for 2026.
For a sole proprietor the effective rate is 20% of net self-employment income after deducting half of self-employment tax, following the same worksheet a SEP uses.
This contribution is discretionary each year, which suits businesses whose income moves around.
Where the ceiling binds
The combined total cannot exceed $72,000 for 2026, excluding catch-up contributions.
An S corporation owner paying themselves about $190,000 reaches it with the deferral plus 25% of wages.
Above that point, extra income does not create extra room, so the plan stops being the reason to increase W-2 wages.
Try it in Walnut
Walnut connects to your brokerage, including a Solo 401(k) at a mainstream custodian, and reads it with the rest of your accounts.
Catch-ups sit outside the cap
The $8,000 catch-up from age 50 is additional to the $72,000, giving $80,000.
At ages 60 to 63 the catch-up is $11,250, giving $83,250.
This is one of the largest tax-advantaged contributions available to any individual, and it exists only for owner-only businesses with the income to support it.
Adding a spouse
A spouse genuinely working in the business can be paid, defer their own $24,500 and receive their own employer contribution.
That takes a household toward $144,000 of annual contributions before catch-ups, where the business supports the compensation.
The compensation has to be real and reasonable for the work performed, which is where this arrangement is examined if it is examined at all.
Compensation has to be real
The employer contribution is a percentage of compensation, so an S corporation owner paying themselves a small salary limits their own plan.
Paying more salary raises the contribution room and also raises payroll tax, so the two move against each other.
Where a spouse participates, their compensation has to be reasonable for work actually performed, which is the point examined if the arrangement is ever questioned.
Sources
The 2026 deferral, catch-up, $72,000 annual additions and $360,000 compensation figures are from IRS Notice 2025-67. Contribution calculations for the self-employed are in Publication 560, and plan rules at One-participant 401(k) plans. Walnut is informational and is not an investment adviser. This guide is educational and not personalized tax advice.
FAQ
How much can I contribute to a Solo 401(k) in 2026?
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$24,500 as an employee deferral plus an employer contribution of up to 25% of compensation, with both together capped at $72,000. Catch-ups of $8,000 from age 50, or $11,250 at ages 60 to 63, are on top of that cap.
What income do I need to reach $72,000?
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Roughly $190,000 of W-2 wages from your own corporation, where $24,500 of deferral plus 25% of wages reaches the cap. As a sole proprietor the figure is higher, because the employer share is calculated at the effective 20% rate.
Do catch-up contributions count toward the $72,000?
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No. Catch-ups sit outside the annual additions limit, so someone over 50 can contribute $80,000 in 2026 and someone aged 60 to 63 can reach $83,250 where income supports it.
Can my spouse contribute too?
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If they work in the business and are paid, yes, with their own deferral and their own employer contribution. That can nearly double what the household puts away, subject to the business genuinely supporting the compensation.
Can I split between Roth and pre-tax?
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The employee deferral can generally be either or both. SECURE 2.0 also allows Roth employer contributions where the plan document supports them, though provider adoption varies.
What if I also defer at a day job?
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The employee deferral limit is shared across all plans, so deferring $24,500 at work leaves none for the Solo 401(k). The employer contribution from your own business is unaffected and can still be made in full.
When must contributions be made?
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Employer contributions are due by the business tax filing deadline including extensions. Employee deferrals normally require an election during the year, with SECURE 2.0 giving sole proprietors extra flexibility in the first plan year.
Does my salary affect how much I can contribute?
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Considerably, if you are an S corporation owner. The employer contribution is a percentage of compensation, so a low salary limits the plan. Raising salary raises the room and also raises payroll tax, so the two work against each other.
What if my business makes a loss?
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No contribution is possible without earned income, so a loss year means nothing goes in. The plan itself can remain open, and contributions resume in a profitable year without any need to re-establish it.
Do I need to make the employer contribution every year?
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No. The employer portion is discretionary and can be skipped entirely in a lean year, while the employee deferral depends on having compensation to defer from. Neither creates an ongoing obligation the way a SIMPLE IRA does.