Solo 401k Adoption in the U.S. (2025): Growth Trends, Demographics, and Stats

For years, the Solo 401k has been a go-to option for self-employed individuals looking to build retirement savings on their own terms. But despite its growing popularity, there’s still a lot of uncertainty around how common this plan actually is.

How many people are using it? What’s driving the shift and who’s being left out?

This article takes a closer look at the current state of Solo 401k adoption in 2025, diving into user demographics, policy changes, growth projections. We’ll explore what the numbers say about how this plan fits into the broader retirement landscape for one-person businesses.

What is a Solo 401k? Quick Overview

A Solo 401k (also called a one-participant plan or individual 401k) is a retirement plan designed specifically for self-employed business owners who don’t have full-time employees.

Since it covers only the owner (and potentially their spouse), the plan isn’t subject to the same nondiscrimination testing required for traditional 401k plans with multiple employees.

Who typically uses Solo 401k plans?

In cases where both spouses participate, the household may be able to contribute more, potentially doubling total contributions.

Basic eligibility (based on IRS guidelines):

✅ You must have self-employment income. This includes earnings from your own business, not just W-2 wages.

✅ You generally cannot employ other full-time or long-term part-time workers. To qualify, your business must not have any common-law employees who work 1,000 hours or more in a year or those who now qualify as long-term part-time employees by working at least 500 hours in each of two consecutive years (per SECURE 2.0, effective 2025).

📌 Also Read: 15 Solo 401k Facts to Know in 2025 (Contributions, Rules, and Strategies)

Solo 401k Current Adoption and Growth Trends

Solo 401k plans continue to gain visibility, but adoption patterns tell a more complex story. While headlines might suggest steady growth, the actual data across filings, surveys, and legislative changes shows a mix of momentum and limits.

Let’s walk through what the latest numbers reveal.

How Common Are Solo 401k Plans Today?

The IRS expects around 123,000 Form 5500-EZ returns to be filed for one-participant plans in the 2025 plan year. That figure is lower than the 222,848 filings reported in 2023.

This decline mainly reflects changes in filing rules rather than a significant reduction in plan usage. Two main reasons explain the lower filing totals:

Meanwhile, actual Solo 401k participation remains stable. According to the Transamerica Institute’s 2025 Annual Retirement Survey, 21 percent of self-employed workers who save for retirement use a Solo 401k. That figure is nearly unchanged from 23 percent in 2024, indicating that overall usage has held steady. Among tax-advantaged retirement options, Solo 401ks rank third, behind IRAs (47 percent) and standard 401k plans from previous employers (36 percent).

Source: Transamerica Institute’s 2025 Annual Retirement Survey

Notably, 75 percent of self-employed savers use some form of tax-advantaged account, but 23 percent remain on the sidelines without any retirement vehicle. This highlights a significant opportunity to grow Solo 401k adoption among freelancers and small-business owners.

What Factors Are Driving Adoption?

Several long-term shifts support the continued popularity of Solo 401k plans among business owners and freelancers.

✅ Growth in Independent Work

✅ Simplified Online Setup

Major brokerage firms, including Fidelity, Vanguard, and Schwab, offer Solo 401k accounts that can be opened entirely online. These platforms provide:

These improvements have made Solo 401k plans more approachable for freelancers and contractors.

✅ Higher Contribution Limits

Contribution caps remain a strong incentive for higher-income self-employed individuals.

📝 Note: These higher limits can be especially valuable for consultants, online business owners, and other professionals earning meaningful dollars through self-employment.

How Legislation Is Supporting Solo 401k Growth

Recent laws and tax credits are making it easier and potentially more affordable to start and maintain a Solo 401k.

✅ Retroactive Contributions Allowed

Self-employed owners can establish a plan by their tax-filing deadline (including extensions) and still make contributions for the prior tax year. This flexibility, introduced in the original SECURE Act and extended under SECURE 2.0, has helped many owners fund plans closer to tax season.

✅ Mandatory E-Filing for Form 5500-EZ

As of 2024, most businesses filing 10 or more federal returns annually must submit Form 5500-EZ electronically. Although this has reduced paper filings, it is expected to improve long-term compliance and make recordkeeping more consistent.

✅ Startup Plan Tax Credit

From 2023, businesses with 50 or fewer employees can qualify for a 100 percent tax credit covering up to $5,000 per year for three years in setup and administration costs.

📝 Note: A Solo 401k is still considered an employer-sponsored retirement plan, even if the “employer” is just you. For credit eligibility, the IRS looks at how many common-law employees your business has. Most owner-only businesses with no full-time employees (aside from a working spouse) fall well within the eligibility limits and can fully benefit from this tax incentive under SECURE 2.0.

Demographic Insights: Who Uses Solo 401k?

Solo 401k plans appeal to a broad range of self-employed Americans, but participation varies based on profession, age, location, and even household structure. Here’s how adoption breaks down across different groups.

Industry and Professional Background

The 2025 Transamerica Workforce Outlook sheds light on the types of self-employed individuals who report saving for retirement:

✅ 48 percent describe themselves as sole proprietors running owner-only businesses
✅ 39 percent identify as freelancers or independent contractors
✅ 26 percent run businesses that employ others in addition to themselves

Among freelancers:

📝 Note: These categories often overlap. For example, a contractor might also run a single-member LLC or receive income from multiple sources.

Age and Saving Behavior

These trends reflect how age and career stage can shape retirement planning behavior.

✅ According to Transamerica’s 2025 data, the median age to start saving for retirement is:

✅ Solo 401k adoption trends higher among:

✅ Adoption is still limited among:

Where Is Solo 401k Adoption Highest?

✅ California reports a self-employment rate of 11.5 percent—nearly twice the national average.
✅ Metropolitan areas with high self-employment rates include Salt Lake City, UT (16.5 percent) and Denver–Aurora–Lakewood, CO (14.5 percent). These regions, along with other mountain and coastal hubs, often show elevated Solo 401k adoption potential due to their strong self-employed populations, knowledge-based economies, and higher living costs.

📝 Important Note:  

State-specific Solo 401k adoption figures are not publicly available. The IRS does not break out Form 5500-EZ filings by geography, and regulators don’t publish counts of one-participant plans at the state level. Because of this, many reports, including this one, use self-employment density as a proxy for potential Solo 401k usage. 

Higher living costs and knowledge-based local economies may also help explain why self-employed professionals in these regions are more likely to seek out higher-contribution plans.

Solo 401k Use in Dual-Earner Households

IRS rules allow a Solo 401k to cover both the business owner and a working spouse, so long as no other full-time employees are on payroll. In these cases, each spouse may contribute up to the full combined limit:

For 2025, each eligible spouse may contribute up to $70,000 (before catch-up contributions, if age 50 or older).

For couples running a business together, this structure offers a way to maximize household contributions within a single retirement plan.

Contribution Timing and Behavior

✅ Most Solo 401k owners make lump-sum contributions on a quarterly or year-end basis.

This timing typically aligns with better visibility into business profits. Although strict contribution timing data isn’t published, IRS rules allow Solo 401k contributions any time up to your personal or business tax-filing deadline, including extensions. As a result, many self-employed individuals choose to wait until income is finalized before making larger deposits.

✅ According to Vanguard, 45 percent of participants increased their contributions in 2024. 

Contribution spikes usually follow strong business performance, making it important for advisors and platforms to encourage more consistent deposits earlier in the year to allow longer compounding.

What’s Ahead: The Future of Solo 401k Adoption

Solo 401k participation is expected to grow steadily—not necessarily because of major shifts in self-employment, but due to better incentives, evolving technology, and expanded access. Policymakers, platforms, and professionals continue to shape the environment in ways that could make Solo 401ks more common and easier to use over the next several years.

Projected Growth Through 2030

✅ Solo 401k plan count may rise significantly: According to PlanAdviser, quoting research from Cerulli Associates, the number of “micro” 401k plans (including Solo 401ks) is expected to grow from around 600,000 in 2023 to more than 1 million by 2029. That’s a projected 66 percent increase over six years.

✅ 66 percent increase expected: This projected growth reflects rising awareness, more accessible setup tools, and expanded tax credits.

✅ Self-employed population holding steady: The U.S. Bureau of Labor Statistics expects self-employment to remain stable, moving from about 9.7 million in 2023 to 9.8 million by 2033, or roughly 5.8 percent of the workforce. This steady base still supports ongoing Solo 401k growth, especially as tax incentives and easier setup tools make the plan more accessible.

Policy Changes Driving Momentum

✅ Startup tax credits: Under SECURE 2.0, small employers — including those with Solo 401ks—may receive a 100 percent tax credit for plan startup costs, capped at $5,000 per year for three years.

✅ Auto-enrollment infrastructure expanding: Beginning in 2025, new multi-employee 401k plans must implement automatic enrollment. While Solo 401ks are not required to adopt auto-enrollment, the shared technology improvements can indirectly benefit solopreneurs by simplifying plan setup and administration.

✅ State-level mandates: Roughly 20 states now require employers to offer a retirement plan or join a state-run auto-IRA program. One-person businesses in these states may choose to adopt a Solo 401k instead, in order to take advantage of the higher $70,000 contribution limit.

Technology Making Plans Easier to Access and Fund

✅ API-based contributions: Tools (such as Human Interest) sync with platforms such as QuickBooks, Stripe, and other payout systems to automate deposits into Solo 401k accounts.

✅ Digital advisor platforms: Platforms like Betterment now support Roth, traditional, and Mega Backdoor Roth contribution options. This makes it easier for financial advisors to offer Solo 401k plans as part of their standard retirement planning workflows.

✅ Mobile-first user experience: Custodians are increasingly offering mobile onboarding and plan management. This allows users to open, fund, and monitor their Solo 401k directly from their phone.

Checklist for Positioning Ahead

✅ File Form 8881 to claim the Solo 401k startup tax credit when filing your 2025 return.
✅ Use payroll-sync tools to automate contributions from 1099 income sources.
✅ Select providers that are upgrading compliance tech for SECURE 2.0, even if the auto-enroll mandate doesn’t apply to Solo plans.
✅ Choose flexible platforms that can convert your Solo 401k into a safe harbor 401k if you plan to hire employees in the future.

Wrapping It Up

Solo 401k plans continue to offer a flexible retirement option for self-employed individuals, with stable participation rates, and growing account balances. While recent IRS filing changes have shifted the appearance of adoption trends, survey data points to consistent usage across key demographics. As technology improves and policy incentives expand, more freelancers and small business owners may find Solo 401ks a practical fit for long-term saving.

📌 Interested in related topics? Explore our other articles on contribution strategies, plan comparisons, and compliance tips for Solo 401ks:

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