401k & Retirement Planning | First State Financial Management

Solo 401(k) - Maximize Your Retirement Potential

If you’re self-employed or run a small business, you’ve likely explored retirement options like SEP IRAs or SIMPLE IRAS. But there’s a powerful alternative you may not know about: The Solo 401(k)- also known as an individual 401(k), single-participant 401(k), or mini 401(k). This plan offers unmatched flexibility, high contribution limits, and simplified administration.

What is a Solo 401(k)?

A traditional 401(k) plan combined with a profit-sharing component, designed exclusively for:

Self-employed individuals
Small business owners with no full time employees (except a spouse)

If you hire full time staff (other than your spouse), you’ll need to transition to a standard 401(k) plan. Starting in 2025, part-time employees working 500+ hours for two consecutive years must also be included.

Feature	2025 Limits
Employee Deferral	Up to $23,500
Catch-Up (Age 50+)	Up to $7,500 (or $11,250 if age 60-63)
Employer Contribution	Up to 25% of compensation (max $350,000)
Total Contribution	Up to $70,000 + catch up

Feature	2025 Limits
Employee Deferral	Up to $23,500
Catch-Up (Age 50+)	Up to $7,500 (or $11,250 if age 60-63)
Employer Contribution	Up to 25% of compensation (max $350,000)
Total Contribution	Up to $70,000 + catch up

Key Benefits

Tax-Deferred Growth

Pay no taxes on contributions or earnings until withdrawal.

Roth Option

Elect after-tax Roth contributions for tax-free qualified withdrawals.

Flexible Contributions

Adjust or suspend contributions based on your cash flow.

Loan & Hardship Withdrawals

Optional features for added liquidity.

Rollovers Accepted

Consolidate IRAs, SEP IRAs, or old 401(k) into one plan.

Simplified Administration

No complex paperwork or testing or reporting for solo plans.

Is a Solo 401(k) Right for You?

A Solo 401(k) is ideal if:

You’re self-employed or own a small business with no full-time employees.
You want to maximize retirement contributions.
You prefer flexibility and control over your retirement savings.

Benefits of IRAs

Retirement Savings Growth
Retirement Savings Growth
Retirement Savings Growth
Retirement Savings Growth

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Solo 401(k) - Maximize Your Retirement Potential

What is a Solo 401(k)?

Why Choose a Solo 401(k)?