2024 Solo 401(k) Contribution Limits - Self-Employed Retirement Guide
Last Updated: April 10, 2024
For self-employed individuals and freelancers, the Solo 401(k) represents one of the most powerful retirement savings tools available. The IRS has announced increased contribution limits for 2024, making this account type even more attractive for maximizing retirement savings.
🚀 Quick Setup
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2024 Solo 401(k) Contribution Limits
- Employee contribution limit: $23,000 (up from $22,500 in 2023)
- Employer contribution: Up to 25% of compensation
- Total combined limit: $69,000
- Catch-up contribution (age 50+): $7,500
- Total limit with catch-up: $76,500
Understanding the Two Types of Contributions
1. Employee Contributions (Elective Deferrals)
- Contribute up to $23,000 as an employee in 2024
- Can be either Traditional (pre-tax) or Roth (after-tax)
- Additional $7,500 catch-up contribution if age 50 or older
- Must be from earned income
2. Employer Contributions
- Up to 25% of compensation (approximately 20% for sole proprietors)
- Must be Traditional (pre-tax)
- Based on your business's net earnings
- Reduces your business's taxable income
💰 Tax Savings Tip
Track your business expenses and Solo 401(k) contributions accurately with FreeTaxUSA. They handle self-employed tax situations and can help maximize your deductions.
Key Deadlines for 2024
- Plan Establishment: December 31, 2024
- Employee Contributions: December 31, 2024
- Employer Contributions: Business tax filing deadline (including extensions)
- Form 5500-EZ: Required if plan assets exceed $250,000
Special Considerations for 2024
- Consider splitting contributions between Traditional and Roth to diversify tax treatment
- If you have multiple businesses, carefully coordinate contribution limits
- Keep detailed records of all contributions and their tax treatment
- Consider working with a tax professional to optimize contribution strategy
🏦 Investment Strategy Tip
Consider using M1 Finance for managing your Solo 401(k) investments. Their automated investing platform can help you maintain a balanced portfolio, and you'll get a $50 bonus when you start investing.
Additional Benefits for 2024
- Loan provisions up to $50,000 or 50% of account balance
- Protection from creditors under federal law
- Ability to invest in a wide range of assets
- Potential tax deductions for plan setup and administration costs
🏥 Healthcare Savings Tip
Pair your Solo 401(k) with a Health Savings Account (HSA). Check out Lively HSA for a free HSA account that can complement your retirement strategy.