Benefits of a Self-Employed 401(k)

• Higher contribution limits: Contribute up to $70,000 in 2025 (employer + employee), plus catch-up contributions if age 50+.
• Tax advantages: Reduce taxable income now with Traditional contributions or enjoy tax-free growth with Roth.

How it works

Who is eligible

• Self-employed individuals, owner-only businesses, or partnerships.

Contributions

• Employee deferrals + employer contributions allowed.
• Contribution maximum: $70,000 in 2025 (plus catch-up if 50+).

Withdrawals

• Early withdrawals before 59½ may face penalties.
• Required minimum distributions begin at age 73.
• Roth withdrawals may be tax-free if conditions are met.

Deadlines

Must establish your plan by year-end and fund by tax deadline.

What are the tax implications of an Individual 401(k) plan?

• Contributions to a traditional Individual 401(k) plan are generally tax deductible.
• Contributions to a Roth Individual 401(k) plan are made with after-tax dollars.
• For a traditional Individual 401(k), earnings grow tax-deferred and assets are not taxed until they are withdrawn in retirement.
• Qualified Roth distributions are tax-free if you are over age 59½ and have held the account for over 5 years.