How much can I contribute to a solo 401(k) for the 2025 tax year?
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For the 2025 tax year, the maximum amount you can contribute to a solo 401(k) (also known as an individual 401(k) or self-employed 401(k)) depends on your role as both employee and employer, your age, and your net self-employment income.
1. Employee Elective Deferral Limit
As the employee, you can contribute up to the annual elective deferral limit:
- $23,500 if you are under age 50.
- $31,000 if you are age 50 or older by the end of 2025 (this includes the $7,500 catch-up contribution).
2. Employer Profit-Sharing Contribution
As the employer, you can also make a profit-sharing contribution of up to 25% of your compensation (for self-employed individuals, this is your net earnings from self-employment, after deducting half of your self-employment tax and the plan contributions for yourself).
- The total employer contribution cannot exceed 25% of your eligible compensation.
3. Overall Contribution Limit
The combined total of employee and employer contributions cannot exceed the lesser of:
- $70,000 for 2025 (not including catch-up contributions), or
- 100% of your eligible compensation.
If you are age 50 or older, you may contribute an additional $7,500 as a catch-up contribution, for a total of $77,500.
4. Calculation of Compensation for Self-Employed Individuals
For self-employed individuals, "compensation" is your net earnings from self-employment, minus:
- The deduction for one-half of your self-employment tax, and
- The deduction for contributions to your own solo 401(k).
The IRS provides a worksheet to help calculate the maximum deductible contribution for self-employed individuals, as the calculation is circular (your contribution reduces your net earnings, which in turn affects your contribution limit).
5. Additional Notes
- The employee deferral limit applies to all 401(k) plans you participate in during the year. If you have another job with a 401(k), your total elective deferrals across all plans cannot exceed $23,500 (or $31,000 if age 50+).
- The employer contribution limit is per plan, so if you have multiple businesses with solo 401(k)s, the limit applies to each business separately, but the overall limit is aggregated if the businesses are related.
Example
If you are under age 50 and have $100,000 in net self-employment income (after deducting half of your self-employment tax and your own plan contribution):
- You may defer $23,500 as an employee.
- You may contribute up to $25,000 as employer (25% of $100,000).
- Your total contribution would be $48,500, which is under the $70,000 limit.
If you are age 50 or older, you could add the $7,500 catch-up, for a total of $56,000.
In summary: For 2025, you can contribute up to $23,500 as an employee, plus up to 25% of your eligible compensation as employer, not to exceed a total of $70,000 (or $77,500 if age 50 or older), subject to your net self-employment income.
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