Solo 401(k): The Smart Retirement Solution for Entrepreneurs - Aligned with Your Values
As a business owner, you are an expert at growing your company. Now it is time to grow your retirement savings just as strategically in a way that honors your faith and values. Our Solo 401(k) plans offer self-employed individuals and small business owners a powerful way to invest in their future while staying true to their religious principles. (Judeo-Christian-Islamic that are also Shariah compliant)
Why Choose Our Faith-Based Solo 401(k)?
Perfect for entrepreneurs, independent contractors, and small business owners seeking retirement solutions that respect their religious principles, our Solo 401(k) combines, ethico economic™, spiritual integrity with powerful financial benefits without losing your competitive returns.
Retirement plans compared
The Solo 401(k) plan allows the greatest savings potential at every income level, with very manageable administrative requirements.
Compensation | SIMPLE IRA¹ ² | SEP IRA² | Solo 401(k) ² |
|---|---|---|---|
$45,000 | $17,350 | $11,250 | $34,250 |
$85,000 | $18,550 | $21,250 | $43,750 |
$100,000 | $19,000 | $25,000 | $48,000 |
$185,000 | $21,550 | $46,250 | $69,000 |
Chart assumptions for 2024: In a SIMPLE IRA, the maximum annual contribution a business owner can make is a $16,000 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 $69,000. 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 $23,000 in deferrals. Overall limits cannot exceed the lesser of 100% of income up to $69,000. 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.
Faith-Based Investment Options
We understand that your faith guides all aspects of your life, including financial decisions. Our specialized Solo 401(k) plans include:
- Judeo-Christian, Catholic investment options and Islamic Shariah-compliant investment options adhering to Islamic financial principles
- Proprietary Faith-based screening to ensure investments align with religious values
- Ethical investment strategies that support your moral framework
- Expert guidance in faith-conscious wealth building
Solo 401(k) Maximum Savings Potential
Wear both hats – employer and employee – to maximize your retirement savings:
- Make employee contributions up to $22,500 (2024)
- Add profit-sharing contributions as the employer
- Total contributions can reach up to $69,000 annually
- Additional $7,500 catch-up contribution if you're 50 or older
A word about our Shariah-Compliant Investment Features
Our Islamic investment options ensure your retirement savings align with Shariah principles:
- Investments screened for compliance with Islamic finance guidelines
- No involvement in interest-based (riba) transactions
- Exclusion of prohibited industries (haram)
- Regular monitoring to maintain compliance
- Expert guidance from advisors who understand Islamic finance
- As one of the Three Abrahamic faiths, the Shariah compliant investment options also meets the other two Abrahamic faiths investment criteria and goes beyond, as explained above
Tax Advantages That Work for You
Choose the tax treatment that best fits your strategy:
- Traditional pre-tax contributions to reduce your current tax bill
- Roth contributions for tax-free growth and withdrawals in retirement
- Potential tax deductions for employer contributions
Target market
Solo 401(k) plans are suitable for businesses that:
- It is an owner-only corporation, partnership, or sole proprietorship.
- Employs only the owner, or the owner and a spouse.
Types of entrepreneurs:
- Home businesses
- Doctors/attorneys
- Brokers
- Real estate agents
- Shop owners
- Consultants
- Freelancers/gig workers
- Board members
- Insurance agents
- Social media influencers
Are you one of the business owners listed on Are the left? The Solo 401(k) is for valued-based business owners like you.
- Easy setup and maintenance
- Low administrative costs
- Flexible investment options
- Loan provisions available
- Protection from creditors
Plan establishment and funding deadlines
- December 31 for plans seeking to make salary deferrals.
- Tax filing deadline plus extension for plans seeking to make tax-deductible profit-sharing for the applicable tax filing year.
Solo 401(k) plan features
- The advantages of a large company's retirement plan without the complexity.
- High contribution levels
This plan type provides flexibility and the highest savings potential at a low cost. Save using salary deferrals and employer contributions (Limits provided are based on 2024 and indexed for inflation):
- You can defer salary to either a traditional 401(k) (pretax), a Roth 401(k) (after-tax), or both, for a maximum of $23,000 (or 100% of compensation, whichever is less).
- The plan permits employer profit-sharing contributions of up to 25% of compensation⁵.
- Combined salary deferral and employer contributions cannot exceed $69,000 for participants under the age 50.An additional $6,500 in catch-up contributions is available at age 50, for an overall maximum of $69,000. Catch-up contributions can be traditional and/or Roth 401(k).
Roth 401(k) feature
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.
Access to savings
We provide our clients’ peace of mind with their savings. We strive to help you understand your retirement and non-retirement options and “Four-Season” support and service.
Options include:
- Loans: Participants may borrow up to 50% of their retirement account balance or $50,000, whichever is less. The minimum loan amount is $1,000⁴**.
- Hardships: Employee salary deferrals and employer contributions may be accessed before age 59 1/2 due to financial hardship. Participants will be subject to ordinary income taxes and a 10% premature distribution penalty. While hardship withdrawals may allow you to access your funds, they do not automatically exempt you from the 10% penalty. However, there are specific exceptions where the penalty may be waived, such as for medical expenses exceeding a certain percentage of your adjusted gross income. Consult your tax advisor for your specific situation.
- Rollover dollars: Plan participants may access rollover dollars at any time unless they have an outstanding loan.
Take Control of Your Financial Future - Without Compromising Your Faith
You’ve built your business through dedication, and smart decisions, guided by your religious principles. Apply that same focus to your retirement planning with our faith-based Solo 401(k). Don’t wait to secure your financial future in a way that honors your beliefs – the sooner you begin, the more your investments can grow.
Your Values, Your Retirement
Our team understands the unique needs of faith-conscious investors. We work closely with religious scholars and financial experts to ensure our investment options maintain both spiritual and financial integrity.
Ready to Get Started?
Take the first step today toward a retirement plan that honors your spiritual path—whether you follow Jewish, Christian, Catholic, or Islamic traditions—while advancing your financial goals. Our expert team brings together deep knowledge of retirement planning, tax strategy, and religious principles to create a truly personalized solution. We will guide you through establishing a Solo 401(k) that not only maximizes your tax benefits but also ensures every investment aligns with your spiritual values. Schedule a consultation today and discover how we can help you secure your financial future without compromising your beliefs.
Footnotes
- SIMPLE IRA matching contributions are not subject to a compensation limit.
- When calculating non-elective contributions for SIMPLE, SEP, and Solo 401(k) plans, compensation is limited to the first $345,000 for 2024 (indexed for inflation).
- 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.
- Must be a permitted feature of the plan. Will be found in plan documents.
- 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.
⁴** Some of our plan administrators do not support the following features or offer currently:
- Loans
- Part-time employees
- Mega-back-door Roth
- Roth Employer Contributions
We will discuss which custodians offer the services mentioned and which do not during our consultation, before establishing and funding your plan.
