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New 2024 Solo 401k Contribution Limits: Key Updates and Strategies

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The year 2024 brings significant changes to Solo 401k contribution limits and related retirement planning strategies. With the IRS announcing increased contribution limits and modifications under the SECURE 2.0 Act, it’s crucial for freelancers, independent contractors, and small business owners to understand and leverage these updates for optimal retirement savings. 

This guide provides an overview of the key changes and strategic approaches to maximize your Solo 401k contributions.

2024 Solo 401k Contribution Limit Increases

Contribution Limits

The Solo 401k contribution limits for 2024 have seen a significant jump to $69,000 and $76,500 for those aged 50 or older. This increase reflects a continued trend of upward adjustments, providing an excellent opportunity for self-employed individuals and small business owners to accelerate their retirement savings. 

Compared to the 2023 limits of $66,000 and $73,500, respectively, these new limits empower participants to set aside more funds for retirement, potentially impacting their long-term financial security and retirement planning strategies.

IRA Limit Rises and Implications

The increase in IRA contribution limits to $7,000 for 2024 opens up additional avenues for retirement savings. For Solo 401k holders, this provides an opportunity to diversify retirement portfolios by contributing to both a Solo 401k and an IRA. Balancing contributions between these accounts can optimize tax benefits and offer greater flexibility in retirement income sources.

Catch-Up Contribution Consistency

The catch-up contribution limit remaining at $7,500 for 2024 may seem like a status quo, but it holds significant value for individuals over 50. Consistent catch-up contributions can dramatically increase retirement savings over time, offering a powerful tool for those looking to bolster their financial readiness for retirement, especially for those who started saving later in their careers.

Understanding the SECURE 2.0 Act Adjustments

The SECURE 2.0 Act brings in pivotal changes that could reshape retirement savings strategies for Solo 401k participants. Key aspects include potential new contribution types and withdrawal options, offering greater flexibility and control over retirement funds. These changes necessitate a closer look at individual retirement strategies to align with the new opportunities and provisions presented by the Act.

Tax Planning Considerations for 2024

Contribution Limits

With the raised Solo 401k contribution limits for 2024, savvy tax planning becomes crucial. Maximizing contributions can lower taxable income significantly, while Roth contributions offer tax-free growth and withdrawals. Solo 401k holders should consider consulting with tax professionals to optimize their contributions in relation to their overall tax situation and retirement goals.

Strategies for Maximizing Contributions

With increased limits, Solo 401k holders should strategize to maximize their contributions. This involves balancing traditional and Roth contributions, understanding the tax implications, and leveraging catch-up contributions for those nearing retirement.

High Earners

High earners should strategize to utilize the full $69,000 limit without exceeding it, possibly through a combination of employee salary deferral and employer profit-sharing contributions. High-income earners need to strategically navigate the contribution limits to maximize their Solo 401k contributions without exceeding the IRS limits. This may involve a detailed analysis of their income, business structure, and optimal distribution between employee and employer contributions.

Approaching Retirement

For those nearing retirement, leveraging catch-up contributions and balancing between traditional and Roth contributions can optimize tax benefits and retirement income.

Younger Participants

Younger participants can take advantage of the power of compounding by maximizing their contributions early on, setting a solid foundation for their retirement savings.

Income Phase-Out Adjustments for IRAs

2024 also sees adjustments in the income phase-out ranges for IRA contributions. These changes impact eligibility for deductible contributions to traditional IRAs and contributions to Roth IRAs, necessitating a review of your contribution strategy in light of your income level.

Solo 401k Contribution Deadline Awareness

It’s important to note that the deadline to set up and fund your Solo 401k for the year 2024 extends until your tax filing deadline. This flexibility is particularly beneficial as it allows you to make informed decisions based on your financial performance throughout the year. If your business structure permits, you can also take advantage of filing extensions, further extending this deadline. 


Contribution Limit

The changes in Solo 401k contribution limits and related retirement planning rules for 2024 present both opportunities and challenges. It’s important to stay informed and adapt your strategies accordingly. Whether through maximizing contributions, optimizing tax benefits, or exploring IRA options, these updates can significantly impact your journey toward a secure financial future in retirement.

Frequently Asked Questions

What are the new Solo 401k contribution limits for 2024?

For 2024, the Solo 401k contribution limits have increased to $69,000, with an additional $7,500 catch-up contribution for those 50 or older, bringing the total to $76,500.

How does the SECURE 2.0 Act affect my Solo 401k plan?

The SECURE 2.0 Act introduces changes like adjusted catch-up contribution limits and potential modifications to RMD rules, offering more flexibility and savings opportunities for Solo 401k participants.

Can I still make catch-up contributions if I’m over 50?

Yes, individuals over 50 can still make catch-up contributions, with the limit remaining at $7,500 for 2024, allowing for a total contribution of up to $76,500.

How can I balance my contributions between a Solo 401k and an IRA?

Balancing contributions between a Solo 401k and an IRA involves considering factors like tax benefits, income levels, and retirement goals to optimize overall retirement savings and tax efficiency.

What are some tax planning tips for Solo 401k contributions in 2024?

For effective tax planning in 2024, consider maximizing pre-tax contributions to lower taxable income, explore Roth options for tax-free growth, and consult with a tax advisor to align contributions with your overall financial strategy.

6 Responses

  1. I thought that I wanted to open a Solo 401k, however, now I’m confused as to how much I can deduct for 2023? I’m 74 and operate a self employed company with net income of $26,000. Yes, I have other investment income. What I’ve been reading I can only deduct 20% of that? What is the max that I can do? And I can still do an IRA for $7500? Friends are telling me different things.

    1. you should talk to your accountant not your friends on this, but my understanding is that you can contribute the first $30,000 as an employee contribution and 20% of the profit sharing up after that. Vanguard and other websites have contribution calculators.

    2. Yeah no one can answer this question. All the limit rules for 401k’s seem to apply just to 401ks, not traditional IRA / Roth. And all the limit rules for traditional IRA / Roth seem to apply just to those.. no mention of 401k. So I guess it is ok to “double dip” with your earned income, ie if you have $5000 total of earned income, you can use it to fund $5000 into your Roth AND $5000 into your solo 401k! Of course the extra funds would need to come out of your savings. TurboTax let’s you do this too, if that’s something to hang your hat on to let you sleep at night after filing. lol

  2. So if I use the Mega Backdoor Roth option of $73,500 after-tax contribution for 2023, can I also contribute to my Roth IRA in the amount of $7500 for 2023? I’m over 50 years old.

    1. If your income is too high then you cannot contribute to a Roth IRA. However, you can make an after tax contribution to a traditional IRA then roll over to a Roth IRA. This works best if your traditional IRA balance is $0, or you will owe additional taxes in the conversion.

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