Yes. A 1099 worker with self-employment income can contribute to a 401k by opening a Solo 401k (also called an Individual 401k or One-Participant 401k). Because the plan treats you as both the employer and the employee of your own business, you get two contribution slots that stack: for 2026, up to $24,500 as the employee plus an employer profit-sharing contribution of up to 25% of net self-employment income, capped at $72,000 combined before catch-up amounts.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 That structure is what pushes a Solo 401k past what a traditional or SEP IRA can do.
Who Qualifies
Any business owner with self-employment income and no full-time employees other than a spouse can open a Solo 401k.2Internal Revenue Service. One-Participant 401(k) Plans Sole proprietorships, single-member LLCs, partnerships, and S-corporations all qualify. The business needs a genuine intent to earn a profit, since profit is what the contributions and deductions flow from.
The “no employees” rule has a specific line. Under federal participation standards, an employee generally means someone who works at least 1,000 hours in a 12-month period.3Office of the Law Revision Counsel. 26 U.S. Code 410 – Minimum Participation Standards Hire someone who crosses that threshold and your plan can no longer run as a one-participant plan; you’d move into nondiscrimination testing and the broader reporting rules for multi-employee plans. A spouse who works for the business is the only exception, and the plan can cover both of you without losing its simplified status.4Internal Revenue Service. Retirement Plans for Self-Employed People
Watch part-time workers too. Under a SECURE 2.0 change effective for plan years after December 31, 2024, employees who work at least 500 hours in two consecutive years become eligible to participate in 401k plans. So even a long-term part-timer who never hits 1,000 hours in any single year can eventually end your solo status.
How Much You Can Contribute in 2026
The Solo 401k works by combining two separate contributions from the same person wearing two hats.
Employee Deferral
You can defer up to $24,500 of your earned income as the employee piece in 2026.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The deferral can equal 100% of your compensation up to that cap, so if your net self-employment income is $20,000 you can defer the full $20,000.2Internal Revenue Service. One-Participant 401(k) Plans You can direct the deferral to pre-tax (traditional), after-tax (Roth), or a mix.4Internal Revenue Service. Retirement Plans for Self-Employed People
Employer Profit-Sharing
On top of the deferral, your business can contribute up to 25% of your net self-employment income as an employer contribution.2Internal Revenue Service. One-Participant 401(k) Plans Employer contributions are always pre-tax, even if your employee deferrals go to Roth.
Catch-Up Contributions
If you’re 50 or older, you can add another $8,000 in 2026 beyond the standard deferral limit. If you’re between 60 and 63, a SECURE 2.0 “super catch-up” raises that extra amount to $11,250.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Someone in that age window could defer up to $35,750 as an employee in 2026 alone.
Note a coming change: for tax years after December 31, 2026, SECURE 2.0 requires catch-up contributions for certain higher-income participants to be designated as Roth.5Internal Revenue Service. Treasury, IRS Issue Final Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions It doesn’t apply to 2026 contributions.
The Combined Ceiling
Employee deferrals plus employer contributions, not counting catch-ups, cannot exceed $72,000 for 2026.6Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs With catch-ups, the ceiling reaches $80,000 at age 50 and up, or $83,250 for ages 60 to 63. Your total contributions are also capped by your actual earned income for the year: if your business nets $50,000, that’s the hard limit regardless of what the formulas would otherwise allow.
Calculating the Employer Share
The employee deferral is simple: pick a dollar amount up to $24,500 or your earnings, whichever is less. The employer piece takes more work, and the method depends on how your business is structured.
Sole Proprietors and Single-Member LLCs
If you file Schedule C, the employer contribution is based on “earned income,” which the IRS defines as your net self-employment earnings after subtracting half of your self-employment tax and the contribution itself.7Internal Revenue Service. Self-Employed Individuals – Calculating Your Own Retirement Plan Contribution and Deduction Because the contribution appears on both sides of the equation, the IRS uses a reduced-rate table in Publication 560. A stated 25% plan rate works out to an effective 20% of net Schedule C profit after the SE tax adjustment.8Internal Revenue Service. Publication 560 (2025), Retirement Plans for Small Business Most people run the numbers through tax software or the Publication 560 worksheets.
S-Corporation Owners
An S-corp is simpler. You pay yourself a W-2 salary, and the employer contribution is 25% of that salary flat. Your employee deferral also comes out of the W-2 wages, up to $24,500.2Internal Revenue Service. One-Participant 401(k) Plans
If You Also Have a W-2 Job
This is where 1099 workers with a day job get tripped up. Yes, you can still open a Solo 401k based on your 1099 earnings, but the $24,500 employee deferral limit is a per-person limit that applies across every 401k, 403b, and SIMPLE plan you participate in during the year.9Internal Revenue Service. 10Internal Revenue Service. Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan You can fix an excess by withdrawing it by April 15 of the following year, but the better plan is to track totals as you go.
The employer contribution side is separate. Even if your day-job 401k already ate your entire employee deferral, your business can still make an employer profit-sharing contribution of up to 25% of net self-employment income to your Solo 401k, so long as the combined total across plans stays under the $72,000 annual addition ceiling.
Traditional or Roth
Most Solo 401k plans allow either traditional (pre-tax) or Roth (after-tax) employee deferrals, or a mix. The $24,500 cap applies to the combined total.4Internal Revenue Service. Retirement Plans for Self-Employed People
Traditional deferrals reduce your taxable income now; you pay income tax when you withdraw in retirement. Roth deferrals are taxed up front and qualified withdrawals come out tax-free. Employer profit-sharing contributions are always pre-tax regardless of your deferral choice. Which mix works best depends on whether you expect a higher or lower tax rate in retirement, a question worth walking through with a tax professional if your 1099 income swings from year to year.
Deadlines to Open and Fund the Plan
Under a SECURE 2.0 change effective for 2023 and later, sole proprietors with no employees can adopt a new Solo 401k after year-end, as long as the plan is in place by the tax filing deadline without extensions.8Internal Revenue Service. Publication 560 (2025), Retirement Plans for Small Business For most sole proprietors, that means April 15, 2027 for the 2026 tax year. Before this change, the plan had to exist by December 31 of the contribution year.
One catch matters. Employee salary deferral elections generally must be made by the end of the business’s tax year. So while the plan itself can be created in early 2027 and still count for 2026, you need a written deferral election in place by December 31, 2026 for your employee contributions to qualify. The actual deposits, both employee and employer, can be made through the tax filing deadline including extensions.
Setting Up the Plan
The retirement plan trust needs its own Employer Identification Number from the IRS, even if you already use your Social Security Number for business taxes.2Internal Revenue Service. One-Participant 401(k) Plans That keeps the plan’s assets legally separate from your personal finances. Applying online through the IRS website takes about ten minutes.
Most brokerages offer pre-approved Solo 401k plans. The central document is the Plan Adoption Agreement, which spells out eligibility rules, contribution types, and distribution options.11Internal Revenue Service. Preapproved Retirement Plans – Adopting Employer Pre-approved plans carry an IRS opinion letter confirming the plan language is qualified, so you generally don’t need a lawyer to review the paperwork. You fill in your business name, the plan’s effective date, and your designation as trustee.
Once the account is active, you fund it from your business bank account, documenting each deposit as either an employee deferral or an employer contribution. That distinction shows up on your tax return. Setup with most providers takes one to three weeks. Confirm before signing that the plan document includes features you want, like Roth contributions and participant loans, because adding them later can be harder than choosing them upfront.
Taking Money Out
Plan Loans
If your plan document allows loans, and not all do, you can borrow from your Solo 401k balance. The maximum loan is the lesser of $50,000 or 50% of your vested balance, with a floor of $10,000 if your balance is at least that high.12Internal Revenue Service. Retirement Plans FAQs Regarding Loans The loan has to be repaid within five years in substantially equal payments of principal and interest at least quarterly. Miss the schedule and the outstanding balance is treated as a taxable distribution, meaning income tax on the full amount plus a 10% early withdrawal penalty if you’re under 59½.
Early Withdrawals
Money pulled out before age 59½ is generally subject to regular income tax plus an additional 10% penalty.13Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Several exceptions waive the 10% penalty:
- Permanent and total disability of the participant.
- Distributions to a beneficiary after the participant’s death.
- A series of substantially equal periodic payments based on life expectancy.
- Unreimbursed medical expenses exceeding 7.5% of adjusted gross income.
- Up to $5,000 per child for qualified birth or adoption expenses.
- Up to $22,000 for economic losses from a federally declared disaster.
- Up to the lesser of $10,000 or 50% of the account for victims of domestic abuse.
- Separation from self-employment during or after the year you turn 55.
- Distributions after a physician certifies a terminal illness.
The regular income tax on traditional (pre-tax) amounts still applies even when the 10% penalty is waived. Qualified Roth withdrawals come out entirely tax-free once the account has been open at least five years and you’re 59½ or older.
Annual Reporting
A Solo 401k carries almost no paperwork until it grows. You don’t need to file anything with the IRS until the combined assets of all your one-participant plans exceed $250,000 at the end of the plan year.14Internal Revenue Service. 2025 Instructions for Form 5500-EZ Past that threshold, you file Form 5500-EZ annually. A final Form 5500-EZ is also required when you close the plan, regardless of balance.