Skip to main content

Individual 401(k)

Take advantage of this plan's generous contribution limits to save quickly and reduce taxes.

What is an Individual 401(k)?

An Individual 401(k)—also known as a solo 401(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 participate

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. Also C corporations, S corporations, and limited liability companies (LLCs).

Employer contribution limits

  • Up to 25% of compensation* not to exceed $55,000 for the 2018 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 may defer 100% of their compensation up to $18,500 for the 2018 tax year ($24,500 for employees age 50 or older).
  • Employee contributions can be either pre-tax or after tax (Roth).

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 $55,000 for the 2018 tax year ($61,000 if you're age 50 or older).

Investment choices

More than 100 Vanguard mutual fund Investor Shares.

Eligibility

No age, income, or other restrictions.

Vanguard plan features

Roth (after-tax) contributions are allowed.

Account service fees

We charge $20 a year for each Vanguard fund held in a Vanguard Individual 401(k) account. The fee may be waived in certain circumstances.

Account setup & maintenance

  • There's no fee to establish an account.
  • For one-participant plans, annual filing of Form 5500 is required once the plan's assets reach $250,000 or you terminate the 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.

Withdrawals & loans

  • You can't take withdrawals until a specified event, such as reaching age 59½, termination of the plan, separation from service, or other event as identified in 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 may not take a loan from your Vanguard Individual 401(k).

Distributions

  • 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.

Get started with this plan

It's easy to get started. Just download and fill out the new plan kit.

Employer logonEmployee logon

We're here to help

For assistance with new plans:

Call 800-992-7188

For assistance with existing plans:

Call 800-205-6189

Monday through Friday
8 a.m. to 8 p.m., Eastern time


Get complete portfolio management

We can custom-develop and implement your financial plan, giving you greater confidence that you're doing all you can to reach your goals.

Make retirement saving easy

If you don't know how to start saving for retirement, we can help you figure out how much you'll need and how to balance all your savings goals.

Consolidate your accounts

Consider moving accounts you hold elsewhere to Vanguard. You'll enjoy more control of your portfolio now and get a clear picture of your investment strategy.

REFERENCE CONTENT

Layer opened.

Common-law employee

An employee other than an owner, a business partner, or a shareholder of a corporation and their respective spouses. (Independent contractors are not employees.)

Layer opened.

Mutual fund

A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.