Can Life Coaches Open a Solo 401k?

If you’re working independently as a life coach, you may be wondering how to set up a retirement plan outside of traditional employment. The good news: yes, life coaches can open a Solo 401k, as long as you report self-employment income and don’t have full-time employees (other than your spouse).

This type of plan can be especially powerful for coaches looking to reduce taxes and invest more aggressively for retirement. Let’s walk through how it works and what you need to know before setting one up.

📌 Also Read: What Is A Solo 401k? Rules, Eligibility, and FAQ for 2024 & 2025

Do Life Coaches Qualify for a Solo 401k?

If you operate your own life coaching business, whether under a sole proprietorship, single-member LLC, or S corporation, you’re generally eligible to open a Solo 401k. The IRS allows self-employed individuals without full-time employees (other than a spouse) to contribute to this type of plan.

What counts as qualifying income?

You must be earning self-employment income that’s reported on your tax return. This could include:

As long as you’re not on someone else’s payroll and your business doesn’t have non-spouse employees working over 1,000 hours a year, you’re likely eligible.

Benefits of a Solo 401k for Life Coaches

Solo 401k plans offer several tax and savings advantages that can be especially appealing to life coaches with variable income:

✅ Higher contribution limits – You can contribute both as an employee and employer, potentially deferring up to $70,000 in 2025, or $77,500 if you’re 50 or older.

✅ Tax flexibility – Choose between pre-tax (Traditional) contributions to reduce current income, or Roth contributions for potential tax-free withdrawals in retirement.

✅ Business deductions – Employer contributions are typically deductible business expenses, helping reduce your net taxable income.

✅ No income limit on contributions – Unlike Roth IRAs, Solo 401k plans do not phase out based on your income level.

✅ Catch-up if you’re 50+ – If you’re age 50 or older, you can contribute an extra $7,500 on top of the standard $23,500 employee limit in 2025.

How Contributions Work (2025 Rules)

There are two contribution types you can make into a Solo 401k:

1. Employee Contributions

You can contribute up to $23,500 of your net self-employment income (or W-2 wages if your business is an S corp). If you’re age 50 or older, you can add a $7,500 catch-up, for a total of $31,000.

These contributions can be pre-tax (Traditional) or post-tax (Roth), depending on your plan provider.

2. Employer Contributions

In addition to your employee deferral, your business can also make an employer (profit-sharing) contribution of:

Together, your total contribution limit is $70,000 for 2025, or $77,500 with catch-up contributions if you’re 50 or older.

📝 Note: Contributions must be based on earned income from your coaching business. Passive income like dividends or rental income doesn’t count.

📌 Also Read: Important Forms for Solo 401k Owners

Do You Need an LLC or S Corp?

No specific business entity type is required. You can open a Solo 401k whether you’re a:

However, your business structure will affect how your contributions are calculated:

You don’t need to incorporate to open a Solo 401k, but if you’re earning a higher income, it may be worth evaluating whether an S corp structure could offer additional tax advantages.

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

Is a Solo 401k Worth It for Life Coaches?

For life coaches who want to grow their retirement savings beyond IRA limits and lower their taxable income, a Solo 401k can be a highly effective tool. It’s especially helpful for those:

Final Thoughts

Life coaches running their own business can access robust retirement benefits through a Solo 401k. This flexible plan allows you to contribute far more than Traditional or Roth IRA and deduct employer contributions directly through your business.

If you’re earning self-employment income from coaching, it’s worth reviewing whether a Solo 401k aligns with your retirement goals. Compare providers, review contribution strategies, and be mindful of your tax filing responsibilities.

📌 Interested in other self-employed retirement strategies? Check out more of our articles to compare your options:

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