For entrepreneurs, freelancers, and self-employed individuals, it can sometimes feel like your retirement account options are limited. Traditional 401(k)s and IRAs might not provide enough flexibility or contribution limits to build the kind of retirement fund you’re aiming for. Enter the Solo 401(k), a powerful retirement savings option tailored specifically for those who work for themselves or run a small business with no full-time employees (other than a spouse).
At Rocket Dollar, we make setting up a Solo 401(k) straightforward and accessible, so you can focus on what matters: growing your investments and securing your future.
A Solo 401(k), also known as an individual 401(k), is a retirement plan designed for self-employed individuals or small business owners without employees. The plan gives you the dual role of employee and employer, which allows for higher contribution limits compared to traditional IRAs.
The key benefit of a Solo 401(k) is the ability to contribute both as the “employee” and the “employer,” offering greater tax advantages and the potential for faster growth in your retirement savings.
One of the biggest draws of the Solo 401(k) is its high contribution limit. In 2024, you can contribute up to $23,000 as an employee (or $30,500 if you’re over 50) and an additional 25% of your business’s income as the employer, up to a combined total of $66,000 ($73,500 if you’re over 50). These generous limits make the Solo 401(k) one of the most powerful tools for self-employed individuals looking to build significant wealth.
Like traditional 401(k)s, a Solo 401(k) allows you to choose between tax-deferred contributions (traditional) or after-tax contributions (Roth). With the tax-deferred option, you reduce your taxable income today, deferring taxes until you withdraw in retirement. The Roth option lets you pay taxes upfront, and your contributions and earnings grow tax-free, with no taxes due when you withdraw in retirement.
The Rocket Dollar Solo 401(k) gives you access to a wide range of investment opportunities. You’re not limited to just stocks and bonds—you can invest in real estate, private equity, crypto, and other alternative assets. This flexibility allows you to build a more diversified and tailored portfolio, helping you reach your retirement goals faster.
Unlike traditional IRAs, the Solo 401(k) allows you to borrow up to $50,000 or 50% of your account balance (whichever is less) from your plan. This can be a game-changer if you ever need quick access to capital for business or personal use, all without triggering taxes or penalties, as long as it’s repaid within five years.
With Rocket Dollar’s Solo 401(k), you can act as your own trustee. This allows you to take complete control over your investments without needing a custodian to approve every transaction. The ability to make quick, independent investment decisions can be crucial for those involved in fast-moving markets like real estate or private equity.
The Solo 401(k) is ideal for:
Setting up a Solo 401(k) with Rocket Dollar is simpler than ever:
The Solo 401(k) is the ideal retirement vehicle for self-employed individuals and small business owners. With Rocket Dollar, setting up your plan is fast and simple, and you gain access to a world of investment possibilities. Whether you’re looking for tax advantages, high contribution limits, or the freedom to invest in alternative assets, the Solo 401(k) is a powerful tool for building your retirement wealth.