Looking for ways to maximize your retirement savings?
If you are a technology consultant and operate your own consulting business without full-time employees, a Solo 401k might be an excellent fit.
Solo 401ks provide self-employed professionals with higher contribution limits and tax benefits compared to many other retirement plans. This can be especially useful for technology consultants who often juggle project-based work and variable income.
Here’s what you should consider before opening a Solo 401k in 2025.
Who Is Eligible for a Solo 401k?
Solo 401k plans are created for business owners with no full-time employees aside from their spouse. As a technology consultant, if you run your own business — whether as a sole proprietor, LLC, or S corporation — and don’t employ full-time staff, you’re likely eligible.
You likely qualify if you:
✅ Earn self-employment income from your consulting services
✅ Do not have full-time W-2 employees (defined as someone working 1,000+ hours per year)
✅ Operate under a recognized business structure (sole proprietor, LLC, or corporation)
You may not be eligible if:
❌ You employ full-time staff who meet IRS criteria for coverage
❌ You only work as a W-2 employee with no separate business activity
2025 Contribution Limits: How Much Can You Save?
One of the strongest reasons to consider a Solo 401k is the opportunity to save significantly more than traditional retirement accounts allow. This plan lets you contribute both as an employee and employer.
Employee Contributions
In 2025, you can defer up to $23,500 of your income. If you’re 50 or older, an additional catch-up contribution of $7,500 is permitted, increasing your limit to $31,000.
Employer Contributions
Your business can contribute up to:
- 20% of your net self-employment income if you’re unincorporated
- 25% of your W-2 wages if you operate as an S corporation
Total Combined Limit
Together, these contributions can add up to:
- $70,000 if you’re under 50
- $77,500 if you’re 50 or older (including catch-up)
Your net earnings, after expenses and half of your self-employment tax, will determine your maximum employer contribution.
Can You Contribute if You Have Another Job?
Yes, but with conditions. If you hold a W-2 job with its own 401k plan, your employee deferral limits apply collectively across all 401k accounts. For example, if you contribute $15,000 to your employer’s 401k, you may only contribute up to $8,500 to your Solo 401k as an employee (assuming you’re under 50).
Employer contributions from your consulting business are calculated separately and don’t affect what your job’s employer can contribute.
What Investments Are Allowed in a Solo 401k?
Solo 401ks typically offer a wide range of investment choices. Technology consultants often appreciate having control over how their retirement savings grow, and many plans permit:
- Mutual funds, ETFs, stocks, and bonds
- Real estate investments (via self-directed plans)
- Private equity or venture capital opportunities
- Cryptocurrency (if the provider supports it)
- Precious metals
📝 Important Note: Always ensure your investments comply with IRS regulations to avoid prohibited transactions.
Setting Up a Solo 401k as a Technology Consultant
Getting started is straightforward:
- Choose a Solo 401k provider that aligns with your investment and fee preferences.
- Establish your plan before December 31, 2025, to make contributions for the current tax year.
- Decide whether to contribute pre-tax (traditional) or post-tax (Roth).
- Fund your Solo 401k using your consulting income, with contributions allowed up to your tax filing deadline.
Final Thoughts
For technology consultants without full-time employees, a Solo 401k can provide a powerful way to save more for retirement with tax advantages tailored to self-employed professionals. Its flexibility and high contribution limits make it particularly attractive for those with variable income and project-based work.
If you want to explore more options or determine if a Solo 401k suits your needs, consulting with a financial advisor familiar with your industry might help. For additional insights on retirement planning for self-employed workers, feel free to explore our other resources.
📌 If you want to explore more topics like this, read these articles about Solo 401k rules and strategies:
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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