Solo 104(k) Retirement Plan
Retirement plans

Solo 401(k)

An easy option to help entrepreneurs save for retirement.

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Overview

As a financial professional, you know that even the smallest businesses need to implement a retirement plan. The Invesco Solo 401(k)1 offers a high-value, low-cost retirement plan solution that allows solo business owners (and their spouse) to maximize their retirement contributions in a tax-advantaged way. This plan offers greater savings potential than other small business retirement plan solutions. Partner with Invesco for resources and support to help your clients get more out of retirement.

Retirement plans compared

The Solo 401(k) plan allows the greatest savings potential at every income level, with very manageable administrative requirements.

Compensation

SIMPLE IRA² ³

SEP IRA ³

Solo 401(k) ³

$45,000

$17,850

$11,250

$34,750

$85,000

$19,050

$21,250

$44,750

$100,000

$19,500

$25,000

$48,500

$185,000

$22,050

$46,250

$69,750

Chart assumptions for 2025: In a SIMPLE IRA, the maximum annual contribution a business owner can make is a $16,500 deferral plus a 3% matching contribution based on annual compensation. In a SEP IRA, the maximum annual contribution a business owner can make is 25% of annual compensation, up to $70,000. With a Solo 401(k), the maximum annual tax-deductible contribution a business owner can make is 25% of income (20% for self-employment income) plus an additional $23,500 in deferrals. Overall limits cannot exceed the lesser of 100% of income up to $70,000. Employee catch-up contributions are permitted at age 50. SIMPLE IRA employees can contribute an additional $3,500 pretax, while Solo 401(k) participants can contribute an additional $7,500 as traditional pretax and/or Roth after-tax deferrals. SEP IRAs are employer funded plans. There are no catch-up contributions for SEP IRAs. 

Solo 401(k) plan overview

The Invesco Solo 401(k) plan is designed for a business that:

  • Is an owner-only corporation, partnership, or sole proprietorship.
  • Employs only the owner, or the owner and a spouse.
  • Employers with non-spouse long-term part-time⁴ or non-spouse full-time rank-and-file employees such as assistants, clerical workers and lower paid individuals may want to consider an alternate plan type after evaluation by the employer’s tax advisor and/or retirement plan counsel.

Potential clients:

  • Home businesses
  • Doctors/attorneys
  • Brokers
  • Real estate agents
  • Shop owners
  • Consultants
  • Freelancers/gig workers
  • Board members
  • Insurance agents
  • Social media influencers

First year rules for start-up sole proprietors

  • Sole proprietors who establish a Solo 401(k) after the tax year (12/31) but before the employer’s tax filing deadline (no extensions) are permitted to do the following :
  • Retroactive employee salary deferrals  can be made for the prior tax year up to the employee’s tax filing deadline. E.g.: 2024 employee deferrals can be made up to April 15, 2025.
  • Employer profit-sharing contributions can be made up to the employer’s tax filing deadline. E.g.: employer tax year June 30. 2024, employer profit sharing contributions can be made up until June 30, 2025.

All other business entities

  • Employers who establish a Solo 401(k) by December 31 for applicable tax year are permitted to do the following:
  • Salary deferrals permitted
  • Profit sharing contribution permitted up to tax filing deadline plus extension.

Get started

To establish an Invesco Solo 401(k) plan, the employer must complete the Plan Establishment Kit. 

Refer to our instructional video for assistance with completing the Adoption Agreement.

  • An annual retirement account maintenance fee of $30 is paid by the participant for balances under $50,000. The fee is waived for balances of $50,000 and over.5
  • Loans6 have a one-time initiation fee of $75 but no ongoing maintenance fee.

Solo 401(k) plan features

This plan type provides flexibility and the highest savings potential at a low cost. Save using salary deferrals and employer contributions (limits provided are for 2025 and indexed for inflation):

  • Profit sharing contribution are employer contributions which can be as much as 25% of compensation⁷ for each participant. Contributions are pre-tax and are eligible for tax deductions. Compensation is limited to $350,000 when calculating profit-sharing contributions.
  • Salary deferrals are employee contributions that can be deferred as traditional 401(k) (pretax), Roth 401(k) (after-tax), or both. The most a participant can defer in salary deferrals is limited to the lesser of 100% of compensation or:
  • $23,500 if under age 50.
  • $31,000 if age 50 -59 (includes, $7,500 in catch-up contributions).
  • $34,750 if ages 60 – 63. Beginning January 1, 2025, higher catch-up contribution up to $11,250 is permitted for these participants. Contributions may begin January 1 of the year the participant turns 60 and must cease by December 31 of the year they turn 63.
  • $31,000 if age 64+ (includes, $7,500 in catch-up contributions).

Combined salary deferral and employer contributions cannot exceed $70,000 for participants under age 50. This amount does not include catch-up contributions. Catch-up contributions may begin January the year the participant turns 50 years.

Create drawdown strategies with tax-free assets. Like a Roth IRA, contributed amounts are already taxed, but, unlike the Roth IRA, you have greater savings potential and no eligibility requirements. Tax-free earnings are accessible five years from the first contribution and when a triggering event occurs, such as age 59½, disability, or death.

We understand that life’s unexpected events can arise, and to support you through those times, the Invesco Solo 401(k) plan offers access to your retirement savings while you are saving for retirement. Before taking a distribution from your account, consult with your financial professional to carefully evaluate the impact on how the options below affect your financial decision.

  • Loans: You may borrow up to 50% of your retirement account balance or $50,000, whichever is less. The minimum loan amount is $1,000. 
  • Rollover dollars: You may access deposits from other retirement plans at any time unless a loan is outstanding
  • Attainment of normal retirement: At Age 55.
  • Financial Hardship Distributions: Employee salary deferrals and employer contributions may be accessed prior to age 59½ due to financial hardship. You will be subject to ordinary income taxes and a 10% premature distribution penalty.

The early distribution penalty of 10% is waived:

  • At Age 59 ½.
  • For Qualified natural disaster.
  • For Qualified Birth and Adoption. 

Invesco’s competitive edge

  • Partner with us. As a leading independent global investment management firm, our clients may benefit from our commitment to investment excellence, depth of investment capabilities, and organizational strength. 
  • Gain greater insights into direct-held clients’ accounts via Invesco Client Account Access. The portal allows you to view client information and account activity, create filters, upload forms, and, where applicable, perform transactions. 
  • Design asset allocations by using mutual funds, which span every major asset class, including US and international equity and fixed income portfolios and target-risk funds. 
  • Choose from share classes A, C, or R. 
  • Remit and fund retirement contributions efficiently via Retirement Plan Manager. 
  • Allow plan participants to view their accounts and perform certain transactions via online access. 
  • Contact highly trained and knowledgeable Client Services Representatives to provide support to you and your clients.

Key resources

Form name Description
Solo 401(k) Plan Establishment Kit Use this kit to establish a self-service Invesco Solo 401(k) Plan using prototype documents sponsored by Invesco Distributors, Inc.
Solo 401(k) Transfer/Rollover Form Use this form when rolling over a retirement plan distribution to an Invesco Solo 401(k).
Solo 401(k) Participant Enrollment Form Use this form to add an owner/spouse or change future investment allocation percentages to an existing Invesco Solo 401(k) Plan using prototype documents sponsored by Invesco Distributors, Inc.
Invesco Investment Allocation Change Form Use this form to change future investment allocation percentages to an existing Invesco Retirement Plan Account.

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Other related forms

Form name Description
Beneficiary Designation Form Use this form to designate or modify the beneficiary(ies) on your Invesco IRA (including Traditional, Roth, Sep, SARSEP and SIMPLE), 403(b) or Optional Retirement Program (ORP) account or an account with transfer on death (TOD) registration.
Retirement Plan Bank Instruction and Systematic Contribution Form Use this form to add bank instructions to a retirement plan and/or establish systematic retirement plan contributions via the Automated Clearing House (ACH) Network. This form is for employer use only.
Retirement Plan Transmittal Form Use this form to submit retirement plan contributions.
Change of Retirement Plan Trustee or Plan Administrator Form Use this form to add or replace a trustee or plan administrator to the plan.
Solo 401(k) Loan Application and Agreement Use this form to request a loan from an Invesco Solo 401(k) Plan.
Solo 401(k) Loan Repayment Change Form Use this form to change the bank account information and/or loan payment allocation on an existing loan.
Solo 401(k) Distribution Form Use this form to request a distribution from a participant's Solo 41(k) account.
Solo 401(k) Beneficiary Transfer/Distribution Form Use this form to request a transfer or distribution from a deceased participant's Solo 401(k) account.

 

 

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Key information about Solo 401(k)s

The Solo 401(k) plan is a defined contribution plan designed for the sole business owner with no employees other than a spouse. Legal entities such as C Corp, S Corp, Partnership and Sole Proprietorships are permitted to establish a Solo 401(k) plan.

The 500-hour requirement is a per-year requirement for W-2 wage employees. For plan years beginning on or after January 1, 2025, the LTPT 500-hour eligibility requirement is satisfied with two prior consecutive years of service with at least 500 hours (but no more than 1,000 hours) each year. As a result, employees who are at least age 21 who meet this 500-hour requirement for each of two prior consecutive years must be permitted to make salary deferrals into the plan.

For Example: If a W-2 employee who is at least age 21 as of January 1, 2025, worked between 500 and 1000 hours in 2023, and also worked between 500 and 1,000 hours in 2024, this employee is eligible to participate in the plan and make salary deferral contributions starting January 1, 2025.

According to the IRS, an employer’s good faith compliance with this new requirement will suffice until such time that the IRS issues further rules. 

An individual 401(k) and a Solo 401(k) are the same and are designed for the one-person employer and their spouse. Other common names associated with this plan include Uni-K, Single K and One-participant K.

If any non-spouse W-2 employee is LTPT based on the criteria described above, even if they elect NOT to contribute salary deferrals to the plan, this ostensibly subjects the plan to coverage under ERISA, solely by virtue of the employee’s new eligibility to participate. ERISA is a federal law that requires employer plan sponsors to comply with certain fiduciary obligations, and imposes requirements for bonding, fee disclosures, and Form 5500 filings, among other things. A plan’s compliance with ERISA is ultimately the responsibility of the sponsoring employer.

Understanding and complying with ERISA requirements is the responsibility of the sponsoring employer, not Invesco (however, Invesco does provide certain limited support for ERISA disclosure obligations). Please also note, the Solo 401(k) is not designed to support ERISA plans; it is intended for owners and spouses only (and thus exempt from ERISA). 

Invesco’s intent is to amend the Invesco Solo 401(k) Plan to exclude LTPT employees from receiving employer contributions, and to provide for only an employee salary deferral option for LTPT employees. However, since final IRS regulations are still pending, final plan amendments for your plan will depend on further IRS guidance, as referenced above. While we work through this process, employer contributions are not required. 

Contract employees whose services are paid for and reported on a Form 1099 and do not receive W-2 wages are not considered LTPT employees.

While working with a Third-Party Administrator (TPA) is not required, should you choose to utilize the support of a TPA, you may receive up to $500 per year in a tax credit for startup costs for a period of three years. Invesco is not a TPA, but it does provide basic recordkeeping services, applicable plan documents and materials, and certain regulatory notices applicable to your plan. 

IRS Form 5500 is required when plan assets reach $250,000 across all qualified retirement plans. Invesco does not provide IRS Form 5500 support. Please contact your qualified tax professional for assistance.

The Invesco Solo 401(k) plan allows for Roth contributions. Unlike a Roth IRA, a Roth 401(k) has higher contribution limits and no income eligibility requirements.

Related insights

  • 1

    The Invesco Solo 401(k) is intended for a business owner and their spouse only. The inclusion of additional participants will ostensibly cause the plan to be subject to Employee Retirement Income Security Act (ERISA) of 1974 and Invesco Solo 401(k) is not designed to comply with all requirements of this federal law that requires employer plan sponsors to comply with certain fiduciary obligations, and imposes requirements for bonding, fee disclosures, and Form 5500 filings, among other things. A plan’s compliance with ERISA is ultimately the responsibility of the sponsoring employer.

  • 2

    SIMPLE IRA matching contributions are not subject to a compensation limit.
  • 3

    When calculating non-elective contributions for SIMPLE, SEP, and Solo 401(k) plans, compensation is limited to the first $350,000 for 2025 (indexed for inflation).
  • 4

    A Long-Term Part-Time employee earns W-2 wages, is at least age 21 and has worked more than 500 hours but no more than 1000 hours per year for the 2 previous consecutive calendar years. This class of employees must be permitted to make salary deferrals.
  • 5

    The annual fee is waived across all retirement account types if total assets held by the participant in any retirement or non-retirement accounts held directly at Invesco, excluding 529 plans, are $50,000 or greater on the date that fees are assessed. Fund expenses apply.
  • 6

    Must be a permitted feature of the plan. Will be found in plan documents.
  • 7

    When calculating the amount an employer can contribute as a self-employed person under a qualified plan, he or she must deduct from his or her earned income all contributions made for the year for all plans he or she may have. This has the effect of reducing the percentage limit for the employer’s own deductible contributions to the plan to 20% of net profits. This is calculated after the self-employment tax deduction is taken, but before the contribution is made on his or her behalf.