Can Business Coaches Open a Solo 401k?

If you run a coaching business and operate as a one-person show, you may be wondering how to save more for retirement beyond a regular IRA. The good news is, you can potentially open a Solo 401k — a retirement plan built for self-employed professionals like you.

A Solo 401k offers two types of contributions: one as the employee, and one as the employer. This dual role allows eligible business coaches to contribute more each year compared to other retirement plans for the self-employed.

Let’s break down the rules, contribution limits, and key considerations for business coaches in 2025.

How Solo 401k Contributions Work

Employee Contributions

As a business coach, you can make elective deferrals from your self-employment income (or W-2 wages, if you’re incorporated). In 2025, the maximum you can contribute as the employee is $23,500.

If you’re age 50 or older, you’re allowed to make an additional $7,500 catch-up contribution, raising your total employee contribution limit to $31,000.

You can choose between traditional (pre-tax) or Roth (after-tax) contributions, if your plan provider supports both options.

✏️ Hypothetical Example: If you earn $60,000 in net self-employment income from coaching, you can defer $23,500 of that income (or $31,000 if you’re 50 or older), as long as you haven’t already contributed to another 401k plan this year.

Employer Contributions

In your role as employer, you can also make a profit-sharing contribution on top of your employee deferral.

📝 Note: These employer contributions must come from the business, not your personal funds.

📌 Also Read: What Are the Different Types of Business Entities?

Total Contribution Limits for 2025

The combined contribution limit for 2025 is $70,000. This includes both employee and employer contributions.

If you’re 50 or older, your total limit goes up to $77,500, thanks to the catch-up provision.

These limits apply per person, not per plan. If you have another job or business with a 401k plan, your employee deferral limit applies across all plans combined.

📌 Also Read: Important Forms for Solo 401k Owners

Do Business Coaches Qualify for a Solo 401k?

To qualify for a Solo 401k, you need to meet two criteria:

✅ You must have self-employment income.

This can come from coaching sessions, consulting retainers, courses, or even speaking engagements — basically, any income tied to your coaching business.

✅ You cannot have any full-time employees (other than your spouse).

If you hire staff who work more than 1,000 hours per year (or meet the long-term part-time rule under SECURE 2.0), your business may no longer qualify for a Solo 401k. In that case, you’d need to look into other plan options.

📝 Note: Working with freelancers or part-time contractors does not typically disqualify you from opening a Solo 401k.

Tax Advantages for Coaching Income

Solo 401k contributions can offer meaningful tax benefits, especially for high-earning coaches.

✅ Traditional contributions reduce your taxable income in the year they’re made, lowering your income tax bill.

✅ Roth contributions won’t reduce current taxes, but qualified withdrawals in retirement will be tax-free.

✅ Solo 401k contributions (especially employer contributions) are typically deductible as a business expense, which can help reduce your overall self-employment tax burden.

When and How to Open a Solo 401k

To make employee contributions for the 2025 tax year, your Solo 401k must be established by December 31, 2025. However, if you’re only making employer contributions, you may have until your tax filing deadline in 2026 (plus extensions) to open and fund the plan.

You can set up a Solo 401k through a financial institution or provider that offers them. Be prepared to submit details about your business, choose between Roth and traditional contributions (if available), and assign yourself as plan administrator.

Wrapping It Up

For many self-employed coaches, a Solo 401k can be a powerful way to build retirement savings while reducing taxable income. It allows you to take full advantage of your role as both employer and employee, potentially contributing much more than you could to an IRA or SEP plan.

Just make sure your business meets the eligibility requirements, and pay attention to contribution deadlines and income limits. If needed, consult a tax professional to walk through your numbers and help you take full advantage of the plan. 

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