Solo 401(k) Contribution Limit 2027 Self-Employed Calculator
Calculate your 2027 maximum Solo 401(k) contribution (employee deferral + employer profit-share) as a sole proprietor or single-member LLC.
2027 Solo 401(k) Contribution Limits
For 2027 (projected): Employee deferral up to $24,500 (under 50), $32,000 with $7,500 catch-up (50+), $35,250 with $10,750 super-catch-up (ages 60-63 under SECURE 2.0). Employer profit-sharing up to 20% of net SE earnings (25% of W-2 for S corp). Total combined limit (employee + employer): $73,500 (under 50) / $81,000 (50+) / $84,250 (60-63). Source: IRC §401(k), §415, SECURE 2.0 §109. Last updated: 2026-08-25.
Solo 401(k) Math for Sole Proprietors
Sole props compute the employer portion as 20% of (net SE earnings minus 1/2 SE tax). $150K net profit × 20% ≈ $27,500 employer share (after SE tax adjustment). Add up to $24,500 employee deferral = $52,000+ total. Much more than SEP-IRA limit at the same income because the employee deferral is on top.
S Corp Solo 401(k) Differences
S corp shareholders use W-2 wages, not net SE profit. Employer share = 25% of W-2 box 1. Employee deferral = $24,500 (under 50). Reasonable comp limits this — too-low W-2 = too-low retirement contribution but also FICA savings. Run both scenarios to find optimal salary.
How to Calculate Your 2027 Solo 401(k) Contribution Step by Step
The employer half is not 20% of your Schedule C profit — it is 20% of profit after subtracting half your self-employment tax, which is why hand estimates usually overshoot. Worked example for a sole proprietor with $150,000 net profit, under age 50:
- Net earnings from self-employment — $150,000 × 92.35% = $138,525.
- Self-employment tax — $138,525 × 15.3% = $21,194 (the full 15.3% applies because this is under the Social Security wage base).
- Deduct half the SE tax — $150,000 − $10,597 = $139,403 adjusted net earnings.
- Employer profit-share — 20% × $139,403 = $27,881.
- Add the employee deferral — $27,881 + $24,500 = $52,381 total for 2027, all of it deductible.
Two traps the arithmetic hides. First, the 20% figure is the sole-proprietor equivalent of the 25% S corp rate — using 25% on Schedule C profit is the single most common over-contribution error, and an excess contribution carries a 10% excise tax until corrected. Second, the employee deferral limit of $24,500 is per person, not per plan: if you also have a W-2 job with a 401(k), your deferrals across both plans share that one cap, though each employer's profit-share is separate. See the IRS guidance on one-participant 401(k) plans. 2027 figures are projections pending the IRS cost-of-living announcement each autumn. Updated 2026-08-25.
Why Solo 401(k) Beats SEP-IRA
At $80K-$200K SE income, Solo 401(k) typically contributes $10K-$15K MORE than SEP-IRA because the employee deferral ($24,500) is on top of the 20-25% employer share. Plus Solo 401(k) allows Roth deferrals (SEP cannot), allows loans, and (if amended for SECURE 2.0) allows in-plan Roth conversions of after-tax contributions for backdoor Roth.
Frequently Asked Questions
What's the 2027 Solo 401(k) total contribution limit?
Projected for 2027: $73,500 (under 50), $81,000 (age 50+ with $7,500 catch-up), or $84,250 (ages 60-63 with $10,750 super-catch-up under SECURE 2.0). Combined limit of employee deferral plus employer profit-sharing contributions.
What's the 2027 Solo 401(k) employee deferral limit?
$24,500 for 2027 (projected, IRS Rev. Proc. 2024-40 inflation adjustment from 2024's $23,000). Catch-up adds $7,500 at age 50+. SECURE 2.0 super-catch-up adds $10,750 for ages 60-63 starting 2025.
How is the employer profit-share calculated for sole props?
20% of (net SE earnings minus 1/2 SE tax). NOT 25% \u2014 that's for S corp owners using W-2 wages. Sole props use Form 1040 Schedule SE to compute the adjustment. The IRS publishes a worksheet in Pub. 560 to walk through the math.
Can I contribute to both Solo 401(k) and an IRA in 2027?
Yes \u2014 they're independent. Solo 401(k) up to $73,500/$81,000/$84,250 (depending on age) PLUS Traditional or Roth IRA up to $7,000/$8,000 (under 50/50+). Combined retirement savings can exceed $80K-$90K per year for a 50+ self-employed worker.
Does my spouse on payroll get their own Solo 401(k)?
Yes. If your spouse is legitimately employed by your business (W-2, real work, real wages), they can have their own Solo 401(k) with separate $24,500 deferral + employer share. This doubles family retirement savings. The plan must be set up as a Solo 401(k) covering you and your spouse.
When must I set up a 2027 Solo 401(k)?
By December 31, 2027 for the plan to exist (signed adoption agreement). For employee deferrals, the deferral election must happen by year-end. Employer profit-share can be funded by the extended due date of your 2027 return (October 15, 2028). SECURE 2.0 \u00a7317 also allows new sole-prop Solo 401(k) plan + first-year deferral up to tax return due date for 2023+.
How do I calculate my 2027 Solo 401(k) contribution on $150,000 of net profit?
Five steps. (1) Net earnings from self-employment: $150,000 x 92.35% = $138,525. (2) SE tax: $138,525 x 15.3% = $21,194. (3) Adjusted net earnings: $150,000 minus half the SE tax ($10,597) = $139,403. (4) Employer profit-share: 20% x $139,403 = $27,881. (5) Add the $24,500 employee deferral for a total of $52,381, all deductible. The calculator above runs the same sequence with your own numbers.
What happens if I over-contribute to a Solo 401(k)?
An excess contribution is subject to a 10% excise tax for each year it stays in the plan, and the excess plus earnings must be corrected. The most common cause for sole proprietors is applying the 25% S corp rate to Schedule C profit instead of the correct 20% of adjusted net earnings. The second most common is forgetting that the employee deferral cap is per person, not per plan, so deferrals at a W-2 job share the same $24,500 limit.