Running an Amazon FBA business involves more than just listing products and managing shipments. As a self-employed seller, you’re responsible not only for logistics and sourcing, but also for securing your financial future. If you’re looking for a way to save for retirement while potentially lowering your taxable income, a Solo 401k could be worth exploring.
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Get started today with just a few clicks – The Carry Solo 401k Plan is a featured-packed self-directed account that lets you invest in both traditional and alternative assets, take out a loan, or do a Mega Backdoor Roth conversion with a few clicks.
GET STARTEDSolo 401(k) eligibility and contribution limits depend on IRS rules. Carry does not provide tax advice, consult a tax advisor. Carry Advisors LLC, an SEC-registered investment adviser, provides investment advisory services for discretionary and non-discretionary accounts (e.g., Solo 401(k), IRA, taxable brokerage accounts). Bank and trust accounts are not advised by Carry Advisors. Brokerage accounts are introduced by Global Carry LLC and carried by DriveWealth LLC, both members FINRA/SIPC. Advisory fees may apply and additional disclosures are described in our Form ADV and CRS.
This article outlines how Amazon FBA sellers may qualify for a Solo 401k, the benefits it offers, and what to consider before setting one up.
Are Amazon FBA Sellers Eligible for a Solo 401k?
Yes—if you earn self-employment income through your Amazon FBA business and don’t have full-time employees, you may be eligible to open a Solo 401k.
Also known as a one-participant 401k, this retirement plan is designed for individuals who work for themselves and do not employ others full-time. It allows business owners to contribute both as an employee and as the employer, potentially increasing their overall retirement savings.
📝 Note: Hiring a full-time employee (defined as someone working 1,000 hours or more in a year,) disqualifies your business from using a Solo 401k. In that case, you’d need to transition to a traditional 401k plan that covers eligible employees.
Solo 401k Requirements for Amazon Sellers
If you sell on Amazon using the FBA model, here are the key requirements you must meet before opening a Solo 401k:
✅ Self-Employment Income
Your income must come from self-employment activity, such as managing an Amazon storefront, handling inventory, or operating under your own brand. Most sole proprietors report this income on Schedule C, while S corporation owners typically draw W-2 wages.
✅ No Full-Time Employees
Your business cannot employ full-time workers, unless it’s your spouse. If you eventually hire full-time staff, your plan must be updated to reflect that change.
✅ Qualifying Business Structure
Solo 401k plans are available to various types of business entities—including sole proprietorships, LLCs, S corps, and partnerships—as long as you don’t have full-time employees.
✅ Spouse Inclusion Option
If your spouse earns income from your Amazon FBA business, they may also participate in the Solo 401k. This could significantly boost your household’s total contributions.
📌 Also Read: Important Forms for Solo 401k Owners
Why Amazon FBA Sellers May Consider a Solo 401k
For Amazon sellers focused on growing their business, the Solo 401k offers flexibility and meaningful tax advantages. Here’s what makes it appealing:
1. Higher Contribution Limits
As both the employer and the employee, you may be able to contribute more than you could with an IRA. For 2025, the combined limit is $70,000, not including catch-up contributions.
📝 Note: Your maximum contribution depends on your net self-employment earnings, after accounting for self-employment tax and any existing contributions.
2. Flexible Tax Treatment Options
Solo 401k plans allow you to choose between pre-tax (Traditional) and after-tax (Roth) contributions:
- Traditional: Lowers taxable income in the year of the contribution.
- Roth: Contributions are made after-tax, but qualified withdrawals in retirement may be tax-free.
3. Wide Investment Access
Most Solo 401k accounts offer access to a broad range of investments, such as mutual funds, ETFs, stocks, and bonds. Some providers also support alternative assets such as real estate.
📝 Note: Make sure all investments follow IRS rules to avoid penalties for prohibited transactions.
4. Spouse Contributions
If your spouse works in your business—whether by helping with operations, bookkeeping, or inventory—they may also contribute. This can double the amount your household can save each year.
However, if your total plan assets exceed $250,000, you’ll need to file IRS Form 5500-EZ annually.
📌 Also Read: How to Add Your Spouse to Your Solo 401k Plan
2025 Solo 401k Contribution Limits
The IRS has released updated Solo 401k contribution limits for 2025. Here’s what Amazon FBA sellers should know:
Employee Contributions
You may contribute up to $23,500 as the employee. If you’re age 50 or older, you may contribute an additional $7,500 in catch-up contributions, bringing the employee total to $31,000.
Employer Contributions
You may also contribute as the employer:
- Sole proprietors use net business income as the basis.
- S corp owners use their W-2 wages to calculate contributions.
Combined Limit
The total contribution limit is $70,000 in 2025. With catch-up contributions, this increases to $77,500 for those age 50 or older.
📝 Note: Contribution limits depend on your earnings and business structure. The IRS provides specific formulas for each entity type.
📌 Also Read: What Are The Different Types Of Business Entities?
Final Thoughts
If you’re running an Amazon FBA business without full-time staff, a Solo 401k could be a practical way to build retirement savings while managing your tax strategy. It offers higher contribution limits, flexibility in tax treatment, and the option to include your spouse.
So go ahead and review your business income and long-term goals before setting up a plan. If needed, consult with a financial or tax advisor to decide whether a Solo 401k aligns with your situation.
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Disclaimer:
The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.
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