If you’re self-employed, you understand both the freedom and responsibility that come with running your own business. You may also be eligible to open one of the most flexible retirement accounts available: The Solo 401(k).
Individuals with self-employment or business income and no full-time employees other than a spouse may qualify for a Solo 401(k). This may include freelancers, consultants, independent contractors, small business owners, and those earning 1099 income.
A Solo 401(k) allows contributions in both employer and employee roles, which can result in higher contribution limits compared to many other retirement accounts. When opened as a self-directed account through Rocket Dollar, a Solo 401(k) can provide access to alternative assets such as real estate, startups, and private equity, in addition to traditional investments like stocks and bonds.
Here’s how to determine if you may qualify and how to get started.
What Is a Solo 401(k)?
A Solo 401(k), also known as an “individual 401(k),” is a retirement plan intended for self-employed individuals or small business owners who have no full-time employees other than a spouse.
It works just like a traditional 401(k), but with one major advantage: you get to wear both hats, employee and employer. This structure allows contributions from both roles, which can increase total annual contribution limits compared to other retirement plans
At Rocket Dollar, your Solo 401(k) is self-directed, giving you the ability to invest not just in traditional stocks and bonds, but also in alternative assets like real estate, private equity, and even crypto.
Why the Solo 401(k) Is So Powerful
1. Higher Contribution Limits
For 2025, the maximum total Solo 401(k) contribution limit is $69,000, or $76,500 for individuals age 50 and older who qualify for the catch-up contribution.
Here’s how it breaks down:
Employee contribution: Up to $23,500 of your income.
Employer contribution: Up to 25% of your earnings from self-employment.
Combined, these contributions allow for higher annual limits than many other retirement plans, including IRAs.
2. Tax Advantages That Work for You
You can choose between the following contribution types:
Traditional (pre-tax): Possibly lower your taxable income today and pay taxes when you withdraw funds in retirement.
Roth (after-tax): Pay taxes now and enjoy tax-free growth and withdrawals later.
Rocket Dollar lets you structure your Solo 401(k) either way, or even split contributions between the two for flexibility.
3. How a Solo 401(k) May Save You Money on Taxes. This Year and Beyond
Your Solo 401(k) doesn’t just help you save for retirement. It may help you save money on taxes right now.
Reduce Your Taxable Income
When you make pre-tax contributions to your Solo 401(k), you may be able to lower your taxable income for the year.
If you earn $100,000 and contribute $30,000, you may only be taxed on $70,000 of income. That could mean thousands of dollars in tax savings each year.
Tax-Deferred or Tax-Free Growth
The money you contribute grows tax-deferred (or tax-free in a Roth Solo 401(k)), meaning you don’t pay taxes on earnings or gains as they accumulate.
Tax-Advantaged Alternative Investments
Investments made through a self-directed Solo 401(k) can include assets such as real estate, private loans, or other alternatives. Income and gains on those investments generally remain tax-deferred (or tax-free in a Roth Solo 401(k)) until withdrawal.
- Rental income from real estate held inside your Solo 401(k) flows back into the plan tax-deferred.
- Profits from a private equity investment grow tax-free inside a Roth Solo 401(k).
In short, your Solo 401(k) helps your investments grow faster by shielding them from immediate taxation.
4. Expanded Investment Options with a Self-Directed Solo 401(k)
A Self-Directed Solo 401(k) provides access to a broader range of investment options than many traditional retirement accounts.
With Rocket Dollar, you can use your retirement dollars to invest in:
This flexibility enables diversification beyond the stock market and aligns your retirement portfolio with your expertise and interests.
5. Loan Options for Added Flexibility
Your Solo 401(k) can also serve as a short-term financial safety net.
You can take a loan of up to $50,000 or 50% of your account balance (whichever is less) and pay it back to yourself with interest.
It’s a powerful way to access liquidity when you need it without triggering taxes or penalties.
Who Qualifies for a Solo 401(k)?
You may qualify if:
- You have any form of self-employment income (freelancer, consultant, small business owner, etc.) and;
- You have no full-time employees, other than your spouse.
If a spouse is actively involved in the business, they may also be eligible to participate in the plan, which can increase total household contribution limits within IRS guidelines.
How to Make the Most of Your Solo 401(k) Contributions
- Contribute Early and Often: Making regular contributions throughout the year may allow assets to benefit from potential compounding over time.
- Use Both Contribution Types: Consider contributing in both employee and employer roles to reach the allowable annual contribution limits.
- Diversify Through Alternatives: Allocate part of your portfolio to alternative assets for potentially higher, uncorrelated returns.
- Consider a Roth Component: If you expect your income to rise, Roth contributions can deliver tax-free withdrawals later.
- Stay Compliant: Keep records, track contributions, and file IRS Form 5500 once your account balance exceeds $250,000. Rocket Dollar makes this simple with clear guidance and support.
Setting Up a Self-Directed Solo 401(k) with Rocket Dollar
Rocket Dollar was founded to simplify the process of opening and managing self-directed retirement accounts.
Here’s how to get started:
- Choose your plan: Rocket Dollar offers everything you need to open and manage your Solo 401(k).
- Complete your application: It takes just minutes to sign up online.
- Fund your account: Roll over existing retirement funds or contribute new capital.
- Start investing: Explore opportunities in real estate, private equity, crypto, and more.
A Solo 401(k) is one of the most powerful retirement tools available to self-employed individuals. It allows you to contribute more, reduce your taxes, and invest with flexibility, all while staying in control of your financial future.
At Rocket Dollar, we make it simple to take advantage of everything a self-directed Solo 401(k) offers.
Start maximizing your retirement savings today.
Open your Solo 401(k) with Rocket Dollar
Disclaimer
Rocket Dollar, Inc. and its affiliates (collectively, “Rocket Dollar”) do not provide tax, legal, investment, or accounting advice. All marketing materials, including this content, are for general informational purposes only and should not be considered individualized recommendations or financial guidance. You should consult an independent tax advisor, attorney, financial advisor, or CPA to determine whether a Rocket Dollar account or specific investment approach is appropriate for your personal financial situation.
Thomas Young: November 11 2025
Henry Yoshida : November 06 2018
Thomas Young