The Solo 401(k): Your GenX Guide to Smarter Retirement Savings in 2024

Look, as GenXers, you’ve seen it all—from floppy disks to streaming everything—and now, you’re in the driver's seat of our financial futures. If you're self-employed or running a small business without employees (other than maybe your spouse), the Solo 401(k) is still one of the best tools out there to build wealth, save on taxes, and stay flexible.

Originally rolled out in 2002, the Solo 401(k) came to life thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001 (yep, that’s a mouthful). It’s designed to let business owners stash away more cash than other retirement plans and dodge taxes at the same time. And for 2024? The contribution limits just got even sweeter.

2024 Solo 401(k) Contribution Limits

Here’s the deal. In 2024, you can sock away up to $69,000, or $76,500 if you’re 50 or older (catch-up contributions included). There are two parts to these contributions:

1.Salary Deferral Contributions

- Contribute up to $23,000 for 2024.

- If you’re 50 or older, you can add another $7,500, making it a cool $30,500.

- You decide whether these deferrals go in pre-tax or Roth dollars—giving you more control over how and when you pay taxes.

2.Profit-Sharing Contributions

- Your business can kick in up to 25% of your net earnings from self-employment.

- But the total combined contribution can’t exceed $69,000 (or $76,500 if you’re using those catch-up contributions).

The best part? These contributions aren’t locked in. You can adjust them anytime based on how the business is performing. So, if one year’s a banger and the next is a bit tighter, you can roll with it

Double the Savings with Your Spouse

Running your business with your spouse? Good news—you both get to contribute. That means in 2024, you could stash away $138,000 together—or up to $153,000 if you’re both 50 or older. One plan, two participants, and a big boost to your retirement savings.

Partnerships and the Solo 401(k)

If you’re running a business with a partner and no other employees, you’re still good to go with a Solo 401(k). It stays classified as a “single-participant” plan with minimal admin hassle. But if you hire employees beyond your spouse or partner, the plan automatically converts to a regular 401(k). That’s when the fun begins (read: ERISA bonding, nondiscrimination testing, and Form 5500 reporting).

Want to avoid that headache? Keep it simple—stay solo. You can dig into the IRS Form 5500-EZ Instructions for more on how the rules work.

Need Cash? Borrow from Your Solo 401(k)

Here’s where the Solo 401(k) outshines the competition: tax-free loans. You can borrow 50% of your account balance** or up to $50,000—whichever is less. No early withdrawal penalties, no awkward talks with your accountant. Just a quick loan backed by your own savings when you need it most.

Who’s the Solo 401(k) Perfect For?

The Solo 401(k) is tailor-made for:

- Self-employed business owners and small businesses with no W-2 employees.

- Those who want to max out retirement savings and slash their taxable income.

- Anyone who appreciates the flexibility to adjust contributions based on business performance.

- Savvy planners who like having the option to borrow from their own retirement without hassle.

Ready to Get Rolling with a Self-Directed Solo 401(k)?

Choose a custodian with the tools and experience to help you unlock the full potential of a Solo 401(k)—including self-directed investment options. Real estate? Private lending? You call the shots. We’re just here to help you make it happen.

If you’re ready to take control of your financial future, the time is now! Talk with your competent tax professional and let’s make 2024 the year you crush your retirement goals.