The Millennial Business Owner's Guide to the Solo 401(k): Maximize Retirement & Slash Taxes

If you're a solopreneur, freelancer, or self-employed go-getter, there's a retirement tool built just for you—and it's called the Solo 401(k). This underutilized plan can help you save up to $69,000 per year, reduce your tax bill, and grow serious retirement wealth.

Let’s break down how it works, why it beats alternatives like the SEP IRA, and how you can set one up today.

What Is a Solo 401(k)?

Also called an Individual 401(k) or Self-Employed 401(k), this retirement plan is designed for:

• Solopreneurs
• Freelancers & consultants
• Online business owners
• Real estate agents
• Coaches, creatives, and side hustlers
• Any business owner with no full-time W-2 employees, aside from a spouse

Why It’s So Powerful

With a Solo 401(k), you contribute in two roles:

• Employee: Up to $23,000 per year ($30,500 if age 50+)
• Employer: Up to 25% of your compensation

Total limit for 2025: $69,000 ($76,500 if 50+)

You can choose between pre-tax contributions (reduce your taxable income today) or Roth contributions (grow tax-free for life). Plus, many Solo 401(k)s offer:

• Loan provisions (borrow up to $50,000)
• Investment flexibility (including mutual funds, ETFs, and even real estate through self-directed accounts)

Solo 401(k) vs. SEP IRA

While SEP IRAs are simpler to set up, the Solo 401(k) offers:

• Higher contribution flexibility with employee + employer contributions
• Roth option for tax-free growth
• Loan availability

Bottom line: Solo 401(k)s offer more savings potential and greater control.

Case Study: Jason the Marketing Consultant

Age: 35
Business: S-Corp
Salary: $80,000 W-2
Net Profit: $120,000
Goals: Lower tax burden + save aggressively

What We Did:

• $23,000 employee contribution ($13K pre-tax + $10K Roth)
• $20,000 employer contribution (25% of salary)
• Total: $43,000 into Solo 401(k)

In 10 years at 7% returns, Jason could have over $650,000 saved. That’s the power of this plan.

How to Set Up a Solo 401(k) in 5 Steps

1. Confirm eligibility (no full-time W-2 employees)
2. Choose a provider (Fidelity, Vanguard, etc.)
3. Decide Roth vs. Pre-Tax
   • Roth: Great for early-career or lower tax bracket
   • Pre-Tax: Ideal for reducing current taxable income
4. Fund the account
   • Employee contributions: Deadline is Dec. 31
   • Employer contributions: Deadline is tax filing + extensions
5. Maintain compliance
   • If account balance exceeds $250,000, file Form 5500-EZ annually

Pro Tip: Work with a CPA or advisor who understands Solo 401(k)s.

Bonus Strategy: Spousal Contributions

If your spouse helps with the business—even part-time—put them on payroll and open a second Solo 401(k) under the same plan:

• $23,000 employee contribution for them
• Employer match based on their salary

This could let your family contribute over $100,000/year toward retirement—tax-advantaged!

Is a Solo 401(k) Right for You?

If you:

• Run your own business (LLC, S-Corp, sole prop)
• Have no full-time employees
• Want to lower taxes and save aggressively

...then yes. The Solo 401(k) should be on your radar.

Key Benefits:

• High contribution limits
• Roth + pre-tax options
• Flexibility and control
• Huge tax savings potential

Next Steps

Want help deciding if the Solo 401(k) is right for you? Contact Victus Wealth Management—we’ll help you run the numbers and create a custom strategy.

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