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At New Direction Trust Company, Solo 401(k)s are only available to self-employed individuals with no other employees. This allows an account holder to make employee contributions (for a personal tax benefit) and employer contributions (for a business tax benefit) to the same Solo 401(k). In some cases, these contributions will bear the same tax advantages of a Traditional IRA - You defer contributions from your annual income for tax purposes. In other cases, your plan document may allow post-tax Roth contributions (employee contributions only), enabling you to build a tax-free portfolio for the long haul. Your one Solo 401(k) may even permit both types of contribution, again depending on the plan document.

Contribution Deadlines & Annual Limits

Employee Contributions

Tax Year Annual Contribution Limit
(below age 50)
Annual Contribution Limit
(age 50 or above)
Contribution Deadline
2019 100% of Compensation up to $19,000 100% of Compensation up to $25,000 December 31st or the year's final paycheck
2020 100% of Compensation up to $19,500 100% of Compensation up to $26,000 December 31st or the year's final paycheck

Employer Contributions

Tax Year Annual Contribution Limit Contribution Deadline
2019 25% of Compensation up to $37,000 April 15th, 2020 (plus extensions)
2020 25% of Compensation up to $37,500 April 15th, 2019 (plus extensions)

By making employee and employer contributions to the same Solo 401(k), you may contribute up to $56,000 ($19,000 employee + $37,000 employer) in 2019 if you're under age 50 ($55,000 in 2018). You may contribute up to $62,000 ($25,000 employee + $37,000 employer) in 2019 if you're age 50 or above.

401(k) Education

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Investor's Guide to Solo 401(k)s

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Contribution Rules & Strategies

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