What retirement account type has the highest contribution limits for a single owner LLC?

Retirement Savings, Small Business
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March 2017
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One type of retirement plan that can make a lot of sense for a business owner with no employees is the Solo 401(k). You essentially wear two hats in this type of retirement plan structure, the employer and the employee.

  • Employee: elective deferral contribution of up to $18,000  per year or $24,000 per year if you're over age 50.
  • Employer: profit-sharing contribution of up to 25% of compensation (20% in the case of  Sole Proprietor or a Schedule C Tax Payer). If your LLC is taxed as an S Corp, then this limit is 25% of your salary as the business owner (does not include K-1 distributed income).

Total employee plus employer contributions cannot exceed $54,000 in 2017. If you have a spouse who is added to the payroll, the same rules as above apply. Ultimately, you could defer up to $108,000 in 2017 between you and your spouse. Always consult with your CPA about these rules, as they can get quite tricky. Separately, I suggest choosing a Solo 401(k) provider with low annual plan expenses and low-fee investment options. Hope this helps!

Chris Cyndecki, CFP®

March 2017
March 2017