A Solo 401(k) – or Solo(k) – can be a great way for self-employed individuals, or other similar types of businesses, to save for retirement. Here are commonly asked questions about Solo 401(k) accounts and how they work at Guideline.

A Solo 401(k) is a retirement plan where only owners or partners and their spouses are eligible to participate. These plans operate the same way as any other 401(k) plan. Any special treatment is due to who is participating in a Solo 401(k).

In order to be eligible to participate, the owners, partners, or spouses must be doing actual work for the company and receiving compensation for that work (self-employed income counts).

Any business is eligible to open a Solo 401(k) plan, provided only owners, partners, or spouses will be eligible to participate in the plan.

While a business sponsoring a Solo 401(k) can have common-law employees, they must not be eligible for the plan based on the eligibility requirements in the plan document. Allowable eligibility requirements will be discussed below.

It is also important to note that if you are part of a controlled or affiliated service group, you are not able to open a Solo 401(k) plan at Guideline.

Maybe. As mentioned above, Solo 401(k) participants are limited to owners, partners, and spouses. However, simply having common-law employees does not mean you cannot have a Solo 401(k); it means that those common-law employees must be excluded from participating in the plan.

At Guideline, employees can only be excluded if they meet one of the following:

You can find more information about the eligibility criteria Guideline allows here.

If there is a possibility that you would add common-law employees to your company that would not fall under any excluded category, you may want to consider setting a service requirement, even if it would not affect those currently participating in the plan. A 12-month service requirement would give you time to notify Guideline about the new employees and make any desired changes to plan (i.e., adding safe harbor) before the new employee becomes eligible to participate.

With a Solo 401(k) plan, you can make contributions to the plan as both an employee and an employer. The total combined amount you can contribute is $70,000 for 2025 (up from $69,000 in 2024).

The employee contribution limit for Solo 401(k) plans is the same as standard 401(k) limits. For 2025, the limit for a standard 401(k) plan is $23,500 (up from $23,000 in 2024). Solo 401(k) accounts also allow for catch-up contributions of $7,500 for those 50 to 59 and 64 or older, and up to $11,250 for those 60 to 63 years old.

As an employer, you can make a profit-sharing contribution of up to 25% of eligible compensation. If you receive self-employment income, calculating your limit can be complicated and it is not a clear 25% of earned income. You can find a more detailed explanation of the calculation here.

Profit-sharing contributions must be made by the tax-filing deadline plus any applicable extension. The compensation limit that can be used to factor your profit-sharing contribution is $350,000 for 2025 ($345,000 for 2024).

While a Solo 401(k) can make matching contributions (and they would be included in all of the same limits), it is uncommon to include matching contributions in a Solo 401(k) plan.

With Guideline, we allow both pre-tax and Roth 401(k) employee contributions for all our 401(k) plan offerings.

When you log into your Guideline account, you’ll have the option to enter your 401(k) participant dashboard or plan administrator dashboard (if you are a designated plan administrator). You’ll also be able to toggle between the two dashboards once logged in.

From the participant dashboard: Participants who receive W2 income can set up 401(k) contributions by accessing the Contributions page from the main menu. View step-by-step directions on how to set up participant contributions through payroll here. Participants who receive self-employment income can set up a one-time or recurring owner’s draw by following the directions outlined here.

From the administrator dashboard: If you are a designated plan administrator, in the first quarter after receiving your compensation data (if applicable), Guideline will publish a Profit Sharing task. To initiate profit sharing, simply complete the task. You can learn more about profit sharing here.

All 401(k) plans must pass IRS-required nondiscrimination testing each year. However, because Solo 401(k) plans only cover owners, partners, or spouses (all of which are considered highly compensated employees), they are deemed to automatically pass this testing, as long as any rank-and-file employees are properly excluded from the plan.

You typically do not have to file a Form 5500 if plan assets are less than $250,000. If your plan’s total assets at the end of the plan year exceed that limit, you must file a Form 5500-EZ (or a Form 5500-SF with the one-participant plan checked).

At Guideline, we include preparation and electronic filing Form 5500s at no added cost. If you moved your plan to Guideline from another provider, you will need to provide a participant valuation report, so the Form 5500 can be filed, if needed.

If you have a Solo 401(k) and employees other than your co-owners, business partners, or spouses meet the eligibility requirements to participate in the plan, you can continue your 401(k) plan with Guideline. However, your plan would need to transition to one of our standard 401(k) pricing tiers. Any applicable Solo 401(k) discounts would no longer apply.

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