Can Artists Open a Solo 401k?

If you make a living through your art—whether it’s painting, music, graphic design, or creative freelance work—you might be wondering if you’re eligible for a Solo 401k. In most cases, the answer is yes.

A Solo 401k could be a practical retirement savings option for self-employed artists who don’t have any full-time employees. It offers flexibility, higher contribution limits, and a chance to reduce your ordinary income through pre-tax contributions.

Here’s what to know before opening one.

📌 Also Read: How to Set Up A Solo 401k Plan

Who Qualifies for a Solo 401k?

A Solo 401k, also known as a one-participant 401k, is designed for people who work for themselves and don’t have employees. If you run your art business independently, you’re likely eligible.

Here are the key requirements:

✅ Self-Employment Income: You must earn income from your art, such as selling artwork, licensing designs, or taking freelance commissions. Sole proprietors typically report this income on Schedule C. If you operate as an S corporation, it should come from W-2 wages you pay yourself.

✅ No Full-Time Employees: You must not employ anyone who works more than 1,000 hours a year, unless it’s your spouse.

✅ Eligible Business Types: The plan is available to sole proprietors, partnerships, LLCs, and corporations, as long as there are no full-time, non-spouse employees on payroll.

📝 Note: If you eventually hire a full-time employee, your Solo 401k would need to be upgraded to a traditional 401k plan that covers all eligible workers.

📌 Also Read: Important Forms for Solo 401k Owners

What Artists Need to Have in Place

Opening a Solo 401k means meeting a few basic requirements related to how you earn and report your income.

✅ Art-Based Income – Your contributions are based on your business income. This could be net income (if you’re a sole prop), W-2 wages (if you’re an S Corp), or income after accounting for self-employment tax deductions.

✅ Spousal Involvement – If your spouse actively works in your art business and earns income, they can also contribute to the same plan under their own participant account.

✅ Correct Business Structure – Whether you operate as a sole proprietor or an LLC, what matters is that you don’t have any full-time, non-spouse employees.

Why Many Artists Consider a Solo 401k

Solo 401ks are known for flexibility, high contribution potential, and tax advantages. Here’s why they appeal to many creatives:

Higher Contribution Limits

As both the employee and employer in your business, you can contribute in both roles up to the annual limit. For 2025:

Your total combined contribution could reach $70,000 in 2025 or $77,500 if you’re age 50 or older.

📝 Note: How much you’re allowed to contribute depends on your income, your business type, and how your earnings are calculated. Always factor in net income, net adjusted income, or gross income after deductions when calculating how much you can contribute.

Tax Treatment Options

You can choose how your contributions are taxed:

Investment Flexibility

Depending on your provider, you could invest in almost any asset type — from stocks and bonds to mutual funds and certain private funds. Just keep in mind that not all assets are permitted, and investing always carries risk.

Spouse Can Contribute Too

If your spouse works in your business and earns income, they can contribute separately under the same plan. Their contributions follow the same limits, based on their income.

📝 Note: If the combined plan balance goes over $250,000, you’ll need to file Form 5500-EZ with the IRS each year.

Things to Keep in Mind

A Solo 401k might be a good fit if you’re earning a steady income from your art business and don’t have full-time staff. That said, there are a few responsibilities you should be aware of.

What It Offers

✅ Flexible contribution options

✅ Tax-deferred or Roth growth potential

✅ Broad investment access

✅ Eligibility for spouses

What to Watch Out For

📝 Note: Investment growth is not guaranteed. These strategies require careful handling and may carry tax or legal implications if done incorrectly. It’s generally a good idea to work with a financial or tax advisor before making major decisions.

📌 Also Read: Solo 401k Vs SEP IRA

Is a Solo 401k Worth Considering for Artists?

For artists who are self-employed and don’t have full-time employees, a Solo 401k may be a flexible way to save for retirement. It offers relatively high contribution limits, investment flexibility, and the option to include a spouse in the plan.

Still, it’s important to understand the rules around income qualifications, annual filing requirements, and plan eligibility. Not every self-employed artist will benefit in the same way, and some may find other retirement plans more suitable depending on their business structure and income level.

If you’re considering setting up a Solo 401k, reviewing your financial records and speaking with a tax or retirement professional could help you determine whether it aligns with your long-term goals.

📌 Also Read: How to Open a 401k Without An Employer

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