Solo 401k Spouse Retirement Savings and Benefits

As a solo 401k plan participant, you may be wondering if your spouse can contribute to and benefit from your plan. The answer is yes, but there are some rules and limitations to be aware of.

Your spouse can contribute to your solo 401k plan, but only if they are a working spouse and earn income. This is because solo 401k plans are designed for self-employed individuals and their spouses who are also working.

The contribution limits for your spouse will be the same as yours, which is $19,500 in 2022, plus an additional $6,500 if they are 50 or older. This means your spouse can contribute up to $26,000 if they are 50 or older.

As a solo 401k plan, you can also name your spouse as the beneficiary of your plan, which means they will receive the funds in the event of your passing.

If you're a self-employed business owner or a gig worker, a solo 401(k) is a retirement plan option worth considering. This plan allows you to contribute both as an employee and an employer, maximizing your retirement savings potential.

You can contribute up to $69,000 in 2024 and $70,000 in 2025, with an additional $7,500 catch-up contribution allowed for those 50 and older, bringing the total to $76,500 in 2024 and $77,500 in 2025.

Spousal contributions can also be made, allowing for doubled contributions and greater retirement savings for your household. If your spouse is employed by your business, they can contribute to a solo 401(k) as well.

A retirement plan is a type of savings plan designed to help you save for retirement, and there are several options to choose from.

You can start with a traditional 401(k) plan, which offers tax-deferred growth and potential tax-deductible contributions.

However, a Solo 401(k) plan is a great option for self-employed individuals or business owners with no employees, except for a spouse.

This type of plan allows you to contribute as both an employer and an employee, potentially allowing you to save more for retirement.

You can contribute up to $69,000 in 2024 and $70,000 in 2025, and individuals 50 and older can add an extra $7,500 per year in "catch-up" contributions.

In fact, if you're 60 to 63 years old, you can even contribute up to $11,250 in catch-up contributions, bringing the possible maximum contribution to $81,250.

You can open a Solo 401(k) plan through most online brokers and requires a valid Employer Identification Number (EIN).

Once the plan balance is $250,000 or more, you must file an annual report on Form 5500-SF with the IRS at the end of a given year.

You don't have to commit to contributing every year, and you can reduce contributions in lean years and increase contributions when profits are up.

This flexibility makes a Solo 401(k) plan a great option for self-employed individuals who may have fluctuating income.

A solo 401(k) offers high contribution limits, allowing you to contribute up to $69,000 for 2024, with an additional $7,500 catch-up contribution for those 50 and older, bringing the total to $76,500.

This flexibility helps maximize your retirement savings potential. As a self-employed individual, you can contribute both as an employee and an employer, making it easier to save for your future.

With a solo 401(k), you can also borrow from your account, offering financial flexibility. Loans must be repaid with interest, typically within five years, without penalties if the rules are followed.

If your spouse is employed by your business, they can also contribute to a solo 401(k), allowing for doubled contributions and greater retirement savings for your household.

A Solo 401(k) is a retirement savings plan designed for self-employed individuals or small business owners with no full-time employees, except for a spouse.

You can contribute to a Solo 401(k) as both an employer and an employee, which means you can take advantage of contribution limits on both sides. This flexibility helps maximize your retirement savings potential.

As a self-employed individual, you can contribute up to $69,000 in 2024 and $70,000 in 2025, with the option to add an extra $7,500 per year in catch-up contributions if you're 50 or older.

You can have multiple retirement accounts, and it's not uncommon for doctors to have two or even three. Many doctors qualify to use two 401(k)s, but having three or more is rare.

The total employee contribution to all 401(k)s and 403(b)s you're eligible for is capped at $22,500 ($30,000 for 50+ in 2023), but this amount can be split between accounts as you choose.

Each 401(k) from an unrelated employer has its own maximum contribution amount of $66,000, made up of four types of contributions: employee tax-deferred contributions, employee tax-free contributions, employee after-tax contributions, and employer contributions.

Doctors often use a solo 401(k) for moonlighting income, making employer contributions of up to 20% of their net income from self-employment to the account.

Here's a breakdown of the types of contributions allowed in a 401(k):

Vanguard is a great choice for your retirement savings plan, especially if you already have investments there. The company offers low-cost options, but its IT interfaces and customer service can be lacking.

One advantage of using Vanguard is that you can see and invest in your 401(k) from the same login as your other accounts, such as your Roth IRA or taxable brokerage account.

The standard Vanguard solo 401(k) plan allows Roth contributions, but it doesn't offer 401(k) loans or a real brokerage option. I've had a solo 401(k) at Vanguard in the past and I continue to have my brokerage, Roth IRA, and UTMA accounts there.

A SEP IRA is a retirement account for self-employed individuals, small business owners, and freelancers. It's a great option because it has low overhead costs compared to traditional retirement plans.

You can open a SEP IRA even if you don't have an established business, making it a great choice for freelancers and gig workers. The rules for eligibility are straightforward: you must be at least 21 years old, have worked for the employer in at least three of the last five years, and received at least $750 in compensation.

The maximum contribution limit for a SEP IRA is $69,000 in 2024, or 25% of your compensation or net self-employment earnings, whichever is less. The compensation limit that can be used to factor the contribution is $345,000 in 2024.

Contributions to a SEP IRA must be made by the tax filing deadline or extension of the employer's return. This gives you some flexibility in setting up and funding the plan.

The tax treatment of SEP IRA contributions is also beneficial: they are tax-deductible, and you can deduct the lesser of your contributions or 25% of your compensation, subject to the compensation cap.

A Solo 401(k) is a retirement savings plan designed for self-employed individuals or small business owners with no full-time employees, except for a spouse.

This plan offers the same tax advantages as a traditional 401(k), including tax-deferred growth and the potential for tax-deductible contributions.

You can contribute to a Solo 401(k) as both an employer and an employee, potentially allowing you to save more for retirement.

The maximum amount a self-employed individual can contribute to a Solo 401(k) for 2024 is $69,000, and $70,000 in 2025.

Individuals 50 and older can add an extra $7,500 per year in "catch-up" contributions, bringing the total to $76,500 in 2024 and $77,500 in 2025.

Part-time employees who work less than 1,000 hours per year can be excluded from the plan.

You can open a Solo 401(k) through most online brokers and require a valid Employer Identification Number (EIN).

Once the plan balance is $250,000 or more, you must file an annual report on Form 5500-SF with the IRS at the end of a given year.

You don't have to commit to contributing every year to a Solo 401(k), you can reduce contributions in lean years and increase contributions when profits are up.

High contribution limits are a key benefit of a Solo 401(k), allowing you to contribute both as an employee and an employer.

You can borrow from your Solo 401(k) account, offering financial flexibility, but loans must be repaid with interest, typically within five years.

As both the employer and employee, you can make profit-sharing contributions up to 25% of your compensation, further increasing the amount you can contribute to your retirement each year.

If your spouse is employed by your business, they can also contribute to a Solo 401(k), allowing for doubled contributions and greater retirement savings for your household.

To be eligible for a solo 401(k), you must be self-employed or have self-employment income from a business you own. This includes freelancers, consultants, sole proprietors, and small business owners.

You can't have any full-time employees, other than yourself and your spouse. However, part-time employees who work less than 1,000 hours per year can be excluded from the plan.

A solo 401(k) is designed for both incorporated and unincorporated businesses, including sole proprietorships, partnerships, and corporations. To contribute, you must receive a salary or wage from self-employment.

You can have a solo 401(k) if you're a partner in a partnership, but you can't use the retirement plans provided by the partnership. This means you'll need to set up a separate solo 401(k) for your own business.

To establish a solo 401(k), you must meet the business entity requirements. This includes having a valid Employer Identification Number (EIN) and setting up the plan by the last day of the business's tax year.

Here are the key eligibility and requirements for a solo 401(k):

As a self-employed individual or small business owner, choosing a retirement plan that suits your needs can be a daunting task. The Solo 401(k) is a great option, but it's essential to consider your spouse's involvement in the business.

If your spouse is employed by your business, they can also contribute to a Solo 401(k), allowing for doubled contributions and greater retirement savings for your household.

One of the key benefits of a Solo 401(k) is its flexibility with contribution limits. Solo 401(k) plans allow for higher contribution limits compared to traditional retirement accounts.

A comparison of the Solo 401(k) and Roth Solo 401(k) reveals distinct tax strategies and withdrawal guidelines. The Traditional Solo 401(k) allows for both employee and employer pre-tax contributions, while the Roth Solo 401(k) allows for both employee and employer pre-tax contributions, but employee deferrals are after-tax.

To help you determine which plan aligns best with your retirement needs, here's a comparison chart:

By understanding the benefits and features of a Solo 401(k) and considering your spouse's involvement, you can make an informed decision about which plan is best for you.