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Retirement plans
Solo 401(k)
An easy plan option designed to help owner-only employers save for retirement.
Overview
Even the smallest businesses need to implement a retirement plan. The Invesco Solo 401(k) offers a high-value, low-cost retirement plan solution that allows solo business owners to maximize their retirement contributions in a tax-advantaged way. This plan option offers greater savings potential than other small business retirement plan solutions. Turn to Invesco for resources and support to help you get more out of your retirement.
Retirement plans compared
The Solo 401(k) plan allows the greatest savings potential at every income level, with very manageable administrative requirements.
Compensation |
SEP IRA² |
Solo 401(k)² |
|
|---|---|---|---|
$45,000 |
$16,850 |
$11,250 |
$33,750 |
$85,000 |
$18,050 |
$21,250 |
$43,750 |
$100,000 |
$18,500 |
$25,000 |
$47,500 |
$165,000 |
$20,450 |
$41,250 |
$63,750 |
Chart assumptions for 2023: In a SIMPLE IRA, the maximum annual contribution a business owner can make is a $15,500 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 $66,000. 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 $22,500 in deferrals. Overall limits cannot exceed the lesser of 100% of income up to $66,000. The calculations in the above chart are based on an incorporated business making the maximum allowable tax-deductible contribution of 25% and doesn't include catch-up contributions. Employee catch-up contributions are permitted at age 50. SIMPLE IRA employees can contribute an additional $3,000 pretax, while Solo 401(k) participants can contribute an additional $7,500 as traditional pretax and/or Roth after-tax deferrals.
Solo 401(k) plan summary
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.
Ideal employers:
- Home businesses
- Doctors/attorneys
- Brokers
- Real estate agents
- Shop owners
- Consultants
- Freelancers/gig workers
- Board members
- Insurance agents
- Social media influencers
Plan establishment and funding deadlines:
- December 31 for plans seeking to make salary deferrals
- Tax filing deadline plus extension for plans seeking to make a tax-deductible profit sharing contribution for the applicable tax filing year
- Instructional video for completing the Plan Establishment Kit
Solo 401(k) plan features
The advantages of a large company’s retirement plan without the complexity.
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 2023 and indexed for inflation):
- Salary deferrals are permitted as either traditional 401(k) (pretax) contributions, Roth 401(k) (after-tax) contributions, or both, for a maximum of $22,500 (or the lesser of 100% of compensation).
- Employer profit sharing contribution of up to 25% of compensation5 is permitted.
- Combined salary deferral and employer contributions cannot exceed $66,000 for participants under age 50.
- An additional $7,500 in catch-up contributions is available at age 50 for an overall maximum of $73,500. Catch-up contributions can be traditional and/or Roth 401(k).
Create drawdown strategies with tax-free assets. Like a Roth IRA, contributed amounts are already taxed, but unlike the Roth IRA, the employee has 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.
Have peace of mind when saving. Working with a financial professional to understand your retirement and non-retirement options can help you make an informed decision. Options include:
- 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.
- Hardships: 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.
- Rollover dollars: You may access deposits from other retirement plans at any time unless a loan is outstanding
Invesco’s competitive edge
As a leading independent global investment management firm, investors benefit from our commitment to investment excellence, depth of investment capabilities, and organizational strength:
- Maximize your retirement by working with your financial professional to create an asset allocation that aligns with your investment and risk objectives.
- Explore our mutual fund offerings, which span every major asset class, including US and international equity and fixed income portfolios and target-risk funds.
- Invest in share classes A, C, and R.
Work with your financial professional
Optimize your retirement by working with your financial professional to select an asset allocation that aligns with your investment and risk objectives.
Account access and support
Plan sponsor access
Retirement Plan Manager is an online tool that allows sponsors to submit and fund payroll contributions and generate reports.Live support
Speak with a Client Services representative for account assistance, Monday through Friday, from 7:00 a.m. to 6 p.m. CT.Call us at 800 959 4246
Automated investor support
Obtain fund share price, check account balance, and make account transactions 24 hours a day, seven days a week.Call us at 800 245 5463
Key information about Solo 401(k)s
A Solo 401(k) plan is a defined contribution plan and trust designed for the sole business owner with no employees other than a spouse. Legal entities, such as C corporations, S corporations, partnerships, and sole proprietorships, are permitted to establish a Solo 401(k) plan.
An individual 401(k) and a Solo 401(k) are one and the same. This type of plan is designed for the one-person employer and their spouse. Other common names associated with this plan include Solo-k, Uni-k, Single k, and One-participant k.
While working with a third-party administrator (TPA) is not required, should you choose to utilize the support of a TPA, you may receive up to $500 per year in a tax credit for startup costs for a period of three years. Invesco is not a TPA, but it does provide basic recordkeeping services, applicable plan documents and materials, and certain regulatory notices applicable to your plan.
Filing IRS Form 5500 is required when plan assets reach $250,000 across all qualified retirement plans. Invesco does not provide IRS Form 5500 support. Please contact your qualified tax professional for assistance.
The Invesco Solo 401(k) plan allows Roth contributions to be made. Unlike a Roth IRA, a Roth 401(k) has higher contribution limits and no income eligibility requirements.
Other retirement plan options
Explore our other retirement plans designed to help you get more out of retirement.
Footnotes
- 1
SIMPLE IRA matching contributions are not subject to a compensation limit.
- 2
When calculating non-elective contributions for SIMPLE, SEP, and Solo 401(k) plans, compensation is limited to the first $305,000 for 2022 (indexed for inflation).
- 3
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.
- 4
Must be a permitted feature of the plan. Will be found in plan documents.
- 5
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.
