small business retirement

Individual 401(k)

What is an Individual 401(k)?

An Individual 401(k)—also known as an i401(k)—is a retirement plan that can maximize your savings if you're self-employed or if you're a partner in a business whose only employees are the partners and their spouses.

Who can use the plan?

Self-employed individuals and business owners with no common-law employees and their spouses who are employed by the business. 

The business owner can contribute both as an employer and employee. 

C corporations, S corporations, and limited liability companies (LLCs), with no common-law employees, can also participate.

Employer contribution limits

  • Employers can contribute up to 25% of compensation* not to exceed $58,000 for the 2021 tax year and $61,000 for the 2022 tax year.
  • Contributions are generally deductible as a business expense and aren't required every year. When contributions are made, however, all participants must receive the same percentage.

Employee contribution limits

  • Employees can defer 100% of their compensation* up to 19,500 for the 2021 tax year ($26,000 for employees age 50 or older) and $20,500 for 2022 ($27,000 for employees age 50 or older).
  • Employees can make pre-tax or Roth (after-tax) contributions. 
  • Rollovers of pre-tax assets are permitted.

Total contributions

As a business owner, you can contribute both as an employer and employee.* The combined amount of employer plus employee contributions can’t exceed $58,000 for the 2021 tax year ($64,500 if age 50 or older) and $61,000 for the 2022 tax year ($67,500 if age 50 or older).

Investment choices

Participants can choose from more than 100 Vanguard mutual funds, including many from our lower-cost Admiral™ share class. And there's no minimum initial investment.

Browse Vanguard's fund choices

What are Admiral Shares?

  • There’s no fee to establish an account.
  • We charge $20 a year for each fund held in a Vanguard Individual 401(k) account. We'll waive the fee for all participants in the plan if at least one participant has at least $50,000 in qualifying Vanguard assets.

See what Vanguard assets qualify

  • An employer identification number (EIN) is required to establish an Individual 401(k) plan. You can’t use your Social Security number. If you don't have an EIN, apply for one online at IRS.gov.
  • For one-participant plans, annual filing of IRS Form 5500 is required once the plan's assets reach $250,000 at the end of your plan year or you terminate your plan. We'll provide you with information each year to help you complete the form.
  • Plan administration may require occasional duties, such as periodically updating or restating the plan, which we can help you with.

  • You can't take withdrawals until a specified event, such as reaching age 59½, terminating the plan, separating from service, or experiencing another event as identified by the plan.
  • You may be allowed to take a hardship withdrawal, which may be subject to a 10% penalty if you're under age 59½.
  • You can’t take a loan from your Vanguard Individual 401(k).
  • You'll pay ordinary income tax on any taxable distributions.
  • Roth distributions are tax- and penalty-free if taken after age 59½ and you've had the Roth Individual 401(k)for more than 5 years.

Ready to get started?

If you're new to Vanguard, give us a call.

800-992-7188


Are you a Vanguard client looking for a small-business plan? Set up your new plan today.

Ready to get started?

If you're new to Vanguard, give us a call.

800-992-7188


Are you a Vanguard client looking for a small-business plan? Set up your new plan today.

Learn more about small-business retirement

Enhance your retirement plan

Looking to enrich your existing retirement plan with quality mutual funds? Our investment-only service opens the door for you to offer Vanguard funds. 

Learn about our investment-only option

Move your plan to Vanguard

Consider moving the small-business plan you hold elsewhere to Vanguard. You can enjoy high-quality, low-cost funds and reliable service for your portfolio.

Learn how to transfer your plan

*Self-employed individuals must make a special computation to figure the maximum contribution amount. All investing is subject to risk, including the possible loss of the money you invest. Use the rate table or worksheets in Chapter 5 of IRS Publication 560, Retirement Plans for Small Business, or consult a tax advisor.