Who Should Invest in a Solo (Individual) 401k?

Women Who Money
6 min readMar 21, 2022

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It’s essential that all Americans have access to some kind of retirement savings account. It’s something the government and IRS need to always support because Social Security distributions are not intended to be the total extent of one’s retirement income.

For individuals employed by mid and large-size companies, investing for retirement is usually available to them through employer-sponsored retirement plans such as a 401(K) or 403(b) savings option.

That raises the question, “What’s the available option or options to the self-employed small business owner?”

Actually, the U.S. Government through the IRS has made several retirement savings options available to those with self-employment income.

Two of those options are the Solo 401(k) and a Simplified Employee Pension IRA (SEP-IRA).

While both of these options have a substantial following among American small business owners, the advantages associated with the Solo 401(k) have made it a bit more popular.

With that in mind, the following discussion is going to focus on the Solo 401(k) retirement savings plan and how it works.

What is a Solo 401k?

The Solo 401(k) is also referred to as an individual 401(k), one-participant 401(k) plan, self-employed 401(k), or i401(k).

It’s intended to serve as a retirement plan option for sole proprietors, freelancers, a one-member limited liability company (LLC), and other self-employed individuals with no employees, or for entrepreneurs who employ only their spouses.

With an individual 401(k) you can invest in assets such as stocks, bonds, mutual funds, index funds, and exchange-traded funds.

And with a self-directed solo 401(k) you have alternative investment choices, such as real estate, cryptocurrency, peer-to-peer lending, and precious…

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