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Retirement

Solo 401k Contribution Limits & Deadlines (2022 & 2023)

Overview

  • Solo 401k contribution limit for 2022: The contribution limit for 2022 is $61,000 ($67,500 if you'll be at least 50 years of age by December 31, 2022). As an employee, you can contribute up to 100% of your income up to $20,500 ($27,000 if you're over 50). As an emplyoer, you can contribute up to 25% of your compensation (up to 20% if you're not incorporated). Total employee and employer contributions must not exceed $61,000 ($67,500 if you're over 50).
  • Solo 401k contribution deadline for 2022: Employees have until December 31, 2022 to file an election. The deadline to actually contribute money into the account is the federal tax deadline, April 18, 2023. Employers have until April 18, 2023 if operating under a sole proprietorship, C corporation, or LLC taxed as a sole proprietorship. Employers have until March 15, 2023 if operating under a partnership, S corporation, or LLC taxed as a corporation.
  • Solo 401k contribution limit for 2023: The contribution limit for 2022 is $66,000 ($73,500 if you'll be at least 50 years of age by December 31, 2023). As an employee, you can contribute up to 100% of your income up to $22,500 ($30,000 if you're over 50). As an emplyoer, you can contribute up to 25% of your compensation (up to 20% if you're not incorporated). Total employee and employer contributions must not exceed $66,000 ($73,500 if you're over 50).
  • Solo 401k contribution deadline for 2023: Employees have until December 31, 2023 to file an election. The deadline to actually contribute money into the account is the federal tax deadline, April 15, 2024. Employers have until April 15, 2024 if operating under a sole proprietorship, C corporation, or LLC taxed as a sole proprietorship. Employers have until March 15, 2024 if operating under a partnership, S corporation, or LLC taxed as a corporation.

With a solo 401k, you contribute to your plan as both the employer and the employee. Contribution limits and deadlines are different for both sides, and vary further depending on your business entity.

If you're considering opening an account and making contributions, here's a full breakdown of how much you're allowed to contribute for 2022 and 2023, and important deadlines to remember.

The Ocho Solo 401k Plan comes fully managed. We do your tax filings for you, and keep you in compliance. All for zero fees on your assets under management. Learn more.

Solo 401k Contribution Limits for 2022

The solo 401k contribution limit is $61,000 in 2022. If you'll be at least 50 years old by December 31, you're also given $6,500 in catch-up contributions, bringing your total limit to $67,500. Employees can contribute up to 100% of their income, up to $20,500 ($27,000 if you're over 50). Employers can contribute up to 25% of their income (Up to 20% if you're not incorporated).

Roth solo 401k contribution limits for 2022

While employer contributions must always go towards a traditional pre-tax solo 401k, employees can choose to contribute to a Roth solo 401k.

  • Traditional: Contributions to the traditional solo 401k are made with pre-tax dollars. You get a tax-deduction for the year, but you pay taxes when you withdraw from your account in retirement.
  • Roth: Contributions to the Roth solo 401k are made with after-tax dollars. You don't get a tax-deduction, but you pay zero taxes when you withdraw from your account in retirement.

The Roth solo 401k contribution limit in 2022 is the same as the employee contribution limits: Up to $20,500 or $27,000 if you're over 50 years of age.

Employee contribution limits 2022

Remember that for a solo 401k, you make contributions as both the employer and the employee.

If you max out employee contributions in 2022, you're left with $40,500 in room remaining. This can be filled using employer contributions, which is calculated by 25% of compensation if your business is incorporated, and up to 20% if your business is not incorporated.

You could also choose to do a mega backdoor Roth with your solo 401k, which would allow you to contribute even more money into your Roth solo 401k.

Overview of the solo 401k contribution limits for 2022

Contribution Type Contribution Amount
Employee $20,500 ($27,000 if for ages 50 or older)
Employer 25% of compensation (20% if you're not incorporated)
TOTAL $61,000 ($67,500 if for ages 50 or older)

Solo 401k Contribution Limits for 2023

The IRS recently released new 2023 contribution limits for the solo 401k, adjusted for inflation.

The solo 401k contribution limit is $66,000 in 2023. If you'll be at least 50 years old by December 31, you're also given $7,500 in catch-up contributions, bringing your total limit to $73,500. Employees can contribute up to 100% of their income, up to $22,500 ($30,000 if you're over 50). Employers can contribute up to 25% of their income (Up to 20% if you're not incorporated).

Roth solo 401k contribution limits for 2023

Because Roth contributions can only be made by employees, the Roth solo 401k contribution limit is the same as the employee contribution limit.

In 2023, the Roth solo 401k contribution limit is $22,500 ($30,000 if you're over 50).

Employees can choose to make zero, a portion, or all of their contributions towards a Roth solo 401k.

Employee contribution limits 2023

In 2022, you were left with $40,500 after maxing out employee contributions.

In 2023, you're left with $43,500 in room remaining for employer contributions, an increase of $3,000. Calculations on contributions remain the same. Employer contributions are calculated by using 25% of your compensation if your business is incorporated, and 20% if your business is not incorporated.

Overview of the solo 401k contribution limits for 2023

Contribution Type Contribution Amount
Employee $22,500 ($30,000 if for ages 50 or older)
Employer 25% of compensation (20% if you're not incorporated)
TOTAL $66,000 ($73,500 if for ages 50 or older)

Solo 401k Contribution Deadlines for 2022

Contribution deadlines can be a little bit tricky since there are a few different dates to remember. Not only do employees and employers have different deadlines, it also varies depending on your business entity.

A lot of dates are mentioned below. Here's a quick overview before you dive in to help make sense of everything.

  • Because you make contributions as both the employee and the employer with a solo 401k, the contribution deadlines are different.
  • Employees must set up their solo 401k and file an election by the last day of the year, each year they want to contribute. For 2022, the deadline is December 31, 2022.
  • Filing an election only requires you to officially determine how much you'll contribute and which accounts they'll be going to (Roth or traditional).
  • Then, you have until the federal tax deadline to actually contribute the funds into your account. This year, the federal tax deadline is April 18, 2023.
  • The contribution deadline for employers is also the federal tax deadline, April 18, 2023.
  • However, if your business is an S corporation, partnership, or LLC taxed as a corporation, your contribution is one month earlier, March 15, 2023.

Deadlines for employees

Employees have two different deadlines: One for setting up an account and filing a deferral election, and another for actually sending the money and making the contribution into your account.

First deadline: Election deadline - December 31, 2022

If you don't have a solo 401k already, you must set up your account and file your deferral election before the end of the year, December 31, 2022. If you miss the deadline, you won't be able to make contributions for this year. You don't have to send any money by this date. You only need to file the election. Basically, you're telling the IRS exactly how much you’re going to contribute that year AND if they'll be going towards a traditional solo 401k or a Roth solo 401k.

Second deadline: Funding deadline - April 18, 2023

After you file your deferral election, you have until the federal tax deadline to actually make the contributions into your solo 401k account, which is April 18, 2023.

Event Contribution Deadline
Open a solo 401k / File election December 31, 2022
Actual contribution deadline April 18, 2023

Deadlines for employers

For employers, the contribution deadline depends on how your business is structured.

  • If your business is a sole proprietorship, C corporation, or LLC taxed as a sole proprietorship, your contribution deadline is April 18, 2023.
  • If your business is an S corporation, partnership, or LLC taxed as a corporation, your contribution deadline is March 15, 2023.

You can also file for an extension

If approved, you’ll get an additional six months to make your contributions.

  • A sole proprietorship, C corporation, and LLC taxed as a sole proprietorship will have until October 16, 2023.
  • A partnership, S corporation, and LLC taxed as a corporation will have until September 15, 2023.
Entity Type Contribution Deadline Contribution Deadline After Extension
Sole Proprietorship April 18, 2023 October 16, 2023
LLC taxed as a sole proprietorship April 18, 2023 October 16, 2023
C corporation April 18, 2023 October 16, 2023
Partnership March 15, 2023 September 15, 2023
LLC taxed as a corporation March 15, 2023 September 15, 2023
S corporation March 15, 2023 September 15, 2023

Isn't the federal tax deadline April 15 each year?

Yes, the federal tax deadline is normally April 15 every year, unless it falls on a weekend. In 2023, April 15 is a Saturday. It would normally get pushed to the following Monday, but that's also a holiday, Emancipation Day. Therefore, the tax deadline gets pushed to Tuesday, April 18, 2023.

2022 vs 2023 contribution limits

  • In 2023, the total solo 401k contribution limit increased by $5,000 ($66,000 in 2023 vs $61,000 in 2022).
  • In 2023, catch-up contributions are $7,500 over the $6,500 offered in 2022. People ages 50 and up can contribute $73,500 in 2023 vs $67,500 in 2022.
  • In 2023, employees can contribute an extra $2,000.
  • When you max out employee contributions, employers were left with $40,500 in contribution room in 2022. In 2023, maxing out employee contributions would leave you with $43,500 in contribution room.
Contribution Type 2022 Limits 2023 Limits
Employee Elective Deferrals $20,500 ($27,000 if for ages 50 or older) $22,500 ($30,000 if for ages 50 or older)
Employee catch-up contributions $6,500 $7,500
Employer contributions 25% of compensation (20% if you're not incorporated) 25% of compensation (20% if you're not incorporated)
Total $61,000 ($67,500 if age 50+) $66,000 ($73,500 if age 50+)

Solo 401k Contribution Limits for Prior Years

Contribution limits for the solo 401k rise by about $1,000 each year.

  • 2021: $58,000
  • 2020: $57,000
  • 2019: $56,000
  • 2018: $55,000
  • 2017: $54,000
  • 2016: $53,000

Do I need to contribute to a solo 401k every year?

No, you do not need to contribute to your solo 401k plan every year and your account will remain open. It's entirely your decision how much you contribute, if at all. There is no minimum contribution requirement with a solo 401k.

Tax Deduction Limits

While Roth solo 401k contributions are not tax deductible, traditional pre-tax solo 401k contributions are deducted from your taxable income. Since both employee and employer contributions can be made towards a pre-tax solo 401k, your could potentially get a tax deduction up to the solo 401k contribution limit:

  • In 2022, you could get a tax deduction of up to $61,000 or $67,500 if you're over 50.
  • In 2023, you could get a tax deduction of up to $66,000 or $73,500 if you're over 50.

Wrapping Up

A lot of numbers and dates were mentioned in this guide. Here's a summary of the solo 401k contribution limits and deadlines for 2022 and 2023.

Contribution Limits

  • The solo 401k contribution limit for 2022 is $61,000. If you're over 50, the limit is $67,500 when you account for catch-up contributions of $6,500.
  • The solo 401k contribution limit for 2023 is $66,000. If you're over 50, the limit is $73,500 when you account for catch-up contributions of $7,500.
  • With a solo 401k, you make contributions as both the employer and the employee. Employees can contribute up to 100% of their compensation up to a maximum of $20,500 ($27,000 if you're over 50). Employers can contribute up to 25% of compensation (Up to 20% if you're not incorporated).

Contribution Deadlines

  • Employees have until December 31, 2022 to file an election. You don't need to pay anything just yet, you only need to tell the IRS how much you'll be contributing and whether it's going into a traditional solo 401k or a Roth solo 401k
  • After filing an election, you have until the federal tax-filing deadline next year (April 18, 2023) to actually pay the money into your account.
  • On the employer side, your contribution deadline depends on what business entity you're operating. 
  • Employers running a sole proprietorship, C corporation, or LLC taxed as a sole proprietorship have until April 18, 2023. 
  • Employers running a partnership, S corporation, or LLC taxed as a corporation have until March 15, 2023. 
  • Employers can file for an extension that gives them six additional months after their contribution deadline.

At Ocho, we can create your solo 401k plan for you, handle all tax filings, and curate your investments. All for zero fees on assets under management. Learn more.

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