Solo 401k Contribution Limits

The 2021 Solo 401k contribution limit is $58,000 and $64,500 if age 50 or older (2020 limits are $57,000 and $63,500 if age 50 or older). The annual Solo 401k contribution consists of 2 parts a salary deferral contribution and a profit sharing contribution. The total allowable contribution adds these 2 parts together to get to the maximum Solo 401k contribution limit.

Solo 401k contribution calculation for a sole proprietorship, partnership or an LLC taxed as a sole proprietorship.

  • Salary Deferral Contribution 
    Although the term salary deferral is used, these businesses do not provide a W-2 salary to the business owner. For businesses of this type, the salary deferral contribution is based on net adjusted business profit. Net adjusted business profit is calculated by taking gross self employment income and then subtracting business expenses and then subtracting 50% of the self employment tax. In 2021, 100% of net adjusted business profits income up to the maximum of $19,500 or $26,000 if age 50 or older can be contributed in salary deferrals into a Solo 401k (2020 limits are $19,500 or $26,000 if age 50 or older).

  • Profit Sharing Contribution
    A profit sharing contribution can be made up to 20% of net adjusted businesses profits. Net adjusted business profit is calculated by taking gross self employment income and then subtracting business expenses and then subtracting 50% of the self employment tax.

Learn more about the Solo 401k Contribution Limits for a sole proprietorship, partnership or an LLC taxed as a sole proprietorship.

Solo 401k contribution calculation for an S or C corporation or an LLC taxed as a corporation

  • Salary Deferral Contribution
    In 2021,100% of W-2 earnings up to the maximum of $19,500 or $26,000 if age 50 or older can be contributed to a Solo 401k (2020 limits are $19,500 or $26,000 if age 50 or older)

  • Profit Sharing Contribution
    A profit sharing contribution up to 25% of W-2 earnings can be contributed into a Solo 401k.

Learn more about the Solo 401k Contribution Limits for an S or C corporation or an LLC taxed as a corporation.