Solo 401(k)

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. 

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

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. 

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.

Ideal employers:

• 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.