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Solo 401K Rules

A Solo 401K Plan offers a self-employed business owner the ability to make high contribution limits (up to $55,500) as well as borrow up to $50,000 for any purpose. In addition, a Solo 401(k) Plan allows a a plan participant to use his or her retirement funds to make almost any type of investment, including real estate (solo 401K for real estate), tax liens, private businesses, precious metals, and foreign currency on their own without requiring custodian consent tax-free!

The Solo 401(k), also known as an individual 401k plan, is unique and so popular because it is designed explicitly for sole proprietors or small, owner only business.

With respect to the Solo 401K rules, in order to be eligible to establish a solo 401(k) plan, one must satisfy two general requirements:

(i) The presence of self employment activity.

(ii) The absence of full-time employees.

Self employment activity generally includes ownership and operation of a sole proprietorship, Limited Liability Company (LLC), C Corporation, S Corporation, and Limited Partnership where the business intends to generate revenue for profit and make significant contributions to the plan.

Unlike a regular 401(k) plan, a solo 401(k) plan can be implemented only by self-employed individuals or small business owners who have no other full-time employees and are not employed by any business owned by them or their spouse (an exception applies if your full-time employee is your spouse). The business owner and their spouse are technically considered “owner-employees” rather than “employees”.

The following types of employees may be generally excluded from coverage:

  • Employees under 21 years of age
  • Employees that work less than a 1000 hours annually
  • Union employees
  • Nonresident alien employees

The IRA Financial Group is the leading solo 401K provider and was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP, Dewey & LeBoeuf LLP, and Thelen LLP. With our work experience at some of the largest law firms in the country, our attorneys legal and tax knowledge in this area is unmatched.

IRA Financial Group will take care of setting up your entire Solo 401k Plan. The whole process can be handled by phone, email, fax, or mail and typically takes between 1-5 days to complete, the timing largely depending on the custodian holding your retirement funds. Our 401k experts and tax and ERISA attorneys are on site greatly reducing the set-up time and cost. Most importantly, each client of the IRA Financial Group is assigned a tax attorney to help with the establishment of the Solo 401k Plan.

To learn more about the advantages of the Solo 401K Plan with Checkbook Control please contact a 401K Expert at 800-472-0646 or visit

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Posted in Solo 401(k)

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