Is a Solo 401(k) plan right for you? When you’re self-employed, you don’t have the option to join your employer’s 401(k) plan. While you’re on your own to manage your retirement, that doesn’t mean you can’t still get similar tax and investment benefits. One method to do so is with a solo 401(k) account.
A self-employed 401(k) plan is the same as an employer-sponsored plan. However, in this case, you are the employer and the only member of the plan. The only other person you can add to the plan is your spouse if it makes sense for your family's finances.
To help you sift through the many features and benefits of the top solo 401(k) options on the market today, we explored 10 leading providers to compare investment choices, trading platforms, pricing, reputation, financial stability, and much more. From there, we distilled our research to select the best solo 401(k) companies across six categories.
Learn more about the best solo 401(k) companies below to choose the best plan for your needs.
The 6 Best Solo 401(k) Companies of 2021
Best Overall: Fidelity Investments
Fidelity’s self-employed 401(k) plan is our pick for best overall due to a combination of very low fees, a wide range of investment choices, and the company’s emphasis on retirement savings.
No regular account fees and no commissions for stock or ETF trades
Thousands of no-transaction-fee mutual funds including four Fidelity funds with no fund expenses
Retirement resources including calculators, apps, and education resources to help you improve your retirement savings and investment strategy
Some active traders may want more powerful active trading tools
No Roth contribution option or 401(k) loans
No electronic deposit for contributions
Fidelity self-employed 401(k) accounts are a great choice for fee-conscious investors, earning our top overall pick. The Fidelity solo 401(k) charges no opening or closing costs and no annual maintenance fees. Customers can invest in stocks, ETFs, and over 3,400 mutual funds with no trading commissions. That means many small business owners could use this account without ever paying any fees to Fidelity. If you need help to place orders, however, the $32.95 broker-assisted trade fee may be an impediment.
Fidelity supports stocks (including fractional shares), ETFs, mutual funds, options, bonds, and CDs. Among its mutual fund choices are four broad index funds with no expense ratio and no minimum investment. In some cases, Fidelity’s own index funds undercut low-cost competitors like Vanguard. This further demonstrates why Fidelity is a good choice for investors looking to keep costs low.
If you want to level-up your investment plan, you can tap into retirement calculators, apps, and other resources. The only downsides are some inconveniences, like no option to contribute electronically and tools that lag some competitors for active trading. There are also no options to make Roth contributions or take 401(k) loans. We still feel the positives far outweigh the negatives in making this our overall best pick.
Read our full Fidelity review.
Best for Low Fees: Charles Schwab
The Individual 401(k) Plan from Charles Schwab is our top choice for low fees. The account has no opening or maintenance fees as well as no commission trades for stocks or ETFs and over 4,000 no-load, no-transaction-fee mutual funds. Customers can also use its robo-advisor, Schwab Intelligent Portfolios, with no extra fees.
Accounts are free to open and charge no recurring fees
Access to trade stocks, ETFs, and thousands of mutual funds for free
Option for a no-cost robo-advisor
No Roth contributions or solo 401(k) loans
High fees for some mutual fund trades and broker-assisted trades
Charles Schwab is our top choice for low fees in a solo 401(k) plan. Schwab’s version charges no recurring fees and no setup fees. It offers commission-free trades for all stocks and ETFs as well as over 4,200 no-transaction-fee funds on the Schwab OneSource funds list. While Schwab offers excellent customer service, be aware that automated phone trades cost $5 and broker-assisted trades cost $25 each. However, many customers could use this account without paying any fees.
Schwab inventors can tap into stock (including fractional shares), ETFs, mutual funds, bonds, options, and futures, among other investments. If you don’t want to make those choices yourself, you can opt-in to add Schwab Intelligent Portfolios to your account if you have $5,000 or more to invest. This is a fee-free robo-advisor that picks a portfolio of low-cost ETFs for you based on your investment goals and preferences. Those with at least $25,000 can use Schwab Intelligent Portfolios with a human investment advisor for an additional fee.
Schwab’s Solo 401(k) doesn’t offer Roth contributions or 401(k) loans. Its active investment platform may not satiate all expert investors, and its active charting and analysis tools lag behind some other brokerage platforms for active traders. However, the pending integration of TD Ameritrade will bring the coveted thinkorswim® platform under the Schwab umbrella, which is something active traders at Schwab can look forward to.
Read our full Charles Schwab review.
Best for Account Features: E*TRADE
E*TRADE gives you more flexibility with its solo 401(k) offering. E*TRADE supports both traditional individual 401(k) plans and Roth 401(k) plans. You are also able to take out a loan on your 401(k) balance at E*TRADE, all of which makes E*TRADE best in our review for account features.
Choose between traditional or Roth 401(k) contributions
Support for 401(k) loans
No recurring account fees, and commission-free stock and ETF trades
Recent acquisition by Morgan Stanley could lead to some changes
High fee for broker-assisted trades and some mutual fund trades
E*TRADE has a long history of supporting online investors, with its first online trade placed in 1983. It is now a subsidiary of Morgan Stanley after an acquisition that closed in October 2020. At E*TRADE, you can choose between traditional and Roth individual 401(k) plans, which allows you to choose between pre-tax and post-tax contributions. You can also take a 401(k) loan from an individual 401(k) account at E*TRADE.
There are no listed fees to open or keep a solo 401(k) account at E*TRADE. Stock and ETF trades are commission free. The brokerage also supports over 4,500 mutual funds on its no-load, no-transaction-fee list. E*TRADE supports options, futures, and fixed-income bonds and CDs, as well.
E*TRADE has a strong reputation of supporting active online traders, though you can invest completely hands off using its managed portfolios product for an added fee. Experienced traders may prefer using the active Power E*TRADE platform, also available for mobile, as an upgrade to the regular web experience. As a large discount brokerage, it can handle most typical investor needs. It wins in this category thanks to its support for Roth contributions and 401(k) loans.
Read our full E*TRADE review.
Best for Mutual Funds: Vanguard
Vanguard is well known for its own mutual funds and ETFs. If you prefer investing in Vanguard funds, a Vanguard Individual 401(k) plan gives you easy access with no trade costs, making the company our review's best choice for mutual funds.
No fee to establish an account
Trade the Vanguard family of funds with no commissions or load fees
Roth contributions allowed
$20 annual fee for each Vanguard fund held in this type of account
401(k) loans are not supported
If you’re looking to stick with a well-respected list of mutual funds from Vanguard, choose the Vanguard Individual 401(k). The account doesn’t have an annual fee on its own for accounts with at least $10,000 in Vanguard funds. It charges a $20 annual fee below that balance plus a $20 annual fee for each Vanguard fund held in the account. Depending on how you invest, this fee can add up fast and could be a reason to consider buying those Vanguard funds elsewhere. You can also trade stocks and ETFs with no commission, in addition to options and fixed-income investments.
However, that fee could be worthwhile to some investors who want to keep a small number of high-quality Vanguard funds in their portfolios. Vanguard offers 119 of its own mutual funds and 75 ETFs. The average Vanguard expense ratio, what you’re charged for owning a fund, is 0.10% for mutual funds compared to an industry average 0.63%. For ETFs, the average is an even lower 0.06% compared to an industry average 0.25%.
Vanguard’s founder, the late John Bogle, is credited as a pioneer in index investing, bringing the first index fund to market in 1976. Vanguard remains a leader in investment funds as the second-largest asset manager in the world with $6.2 trillion under management.
Read our full Vanguard review.
Best for Active Traders: TD Ameritrade
Most retirement-focused investors would do well to stick with a passive investment style. However, if you’re into active investing, TD Ameritrade offers industry-leading platform options and tools.
Choose between multiple web, mobile, and desktop platforms
Access the advanced thinkorswim® trading platform with no added costs
Roth contributions and 401(k) loans are supported
Accounts will move to Charles Schwab in the future (thinkorswim® will be retained)
Advanced platforms may be overwhelming for newer traders
TD Ameritrade is another renowned discount brokerage and our choice as best for active traders. It offers an individual 401(k) account with no recurring fees and commission-free stock and ETF trades. Its solo 401(k) also supports Roth contributions and 401(k) loans. Its standout feature for active traders, though, is the thinkorswim® active trading platform, which is available on desktop, mobile, and the web.
Before diving into other details, it’s important to note that this brokerage has been acquired by Charles Schwab. TD Ameritrade accounts will become Schwab accounts at some point in the future. However, as you can see from its review on this list, we’re fans of Schwab as well and look forward to seeing the combined capabilities once the integration is complete.
Thinkorswim® is best used on a desktop, though the mobile version is also quite good. The desktop version is a professional-style platform that includes advanced trading tools, advanced charting, and in-app chat support so you can better learn the platform and refine your strategy. While making your decision, you can test it out with a $100,000 paper money (play money) portfolio risk free. If you’re okay with the future transition to Charles Schwab, TD Ameritrade’s powerful platforms, notably charting and analysis tools, make it a solid choice for active traders.
Read our full TD Ameritrade review.
Best for Real Estate: Rocket Dollar
Rocket Dollar allows you to invest in anything you can pay for with a checkbook. That means you can invest in real estate and other non-traditional assets while enjoying the tax advantages of a solo 401(k) account.
“Checkbook control” allows you to invest in real estate and other alternatives
Support for 401(k) loans and Roth contributions
Option for upgraded account that includes free wire transfers, checks, tax form filing, and other features
Basic (Core) accounts require $15 monthly fee and $360 setup fee
Premium (Gold) accounts require a $30 monthly fee and $600 setup fee
If you don’t want the limitations of traditional financial markets, you may want to consider Rocket Dollar. Instead of stocks, ETFs, mutual funds, and bonds, Rocket Dollar accounts give you the control to buy any asset with your solo 401(k) that the IRS allows. That can include rental properties, fix-and-flip real estate, or land that you think will appreciate in value. You can invest outside of real estate as well, such as private investments in a startup or precious metals, however, Rocket Dollar's flexibility makes it the solo 401(k) that's best for real estate.
Rocket Dollar offers two account levels. The Core account charges $15 per month plus a $360 setup fee. It includes the formation of a new LLC to hold your investments, online tools, and online support. The higher-end Gold account costs $30 per month after a $600 setup fee and includes additional features including priority support, a physical checkbook and debit card, a custom name for your LLC, and tax form filing.
This account doesn’t include a regular stock market investment platform and has regular monthly fees, so it isn’t right for everyone. However, for investors who want granular control over non-traditional investments for retirement, Rocket Dollar’s support for real estate purchases with an account checkbook could make it the right choice for your investments.
Just because you don’t have an employer to set up your 401(k) doesn’t mean you can’t have one when self-employed. Choosing a solo 401(k) from any provider on this list could be a good fit for typical retirement savings and investment needs.
Fidelity, Charles Schwab, E*TRADE, and TD Ameritrade are all a good choice for general investment needs. Vanguard and Rocket Dollar may be a better fit for a more specific focus on Vanguard mutual funds or alternative investments. By understanding your retirement investment goals and needs, you can choose the best company for your own solo 401(k).
Best Solo 401(k) Companies
|Solo 401(k) Provider||Why We Picked It||Investment Specialty||Roth Contributions Supported||401(k) Loans Supported|
|Fidelity Investments||Best Overall||General||No||No|
|Charles Schwab||Best for Low Fees||General||No||No|
|E*Trade||Best for Account Features||General||Yes||Yes|
|Vanguard||Best for Mutual Funds||Vanguard Mutual Funds||Yes||No|
|TD Ameritrade||Best for Active Traders||General||Yes||Yes|
|Rocket Dollar||Best for Real Estate||Checkbook control||Yes||Yes|
Frequently Asked Questions: Solo 401(k)
What Is a Solo 401(k)?
A solo 401(k) is a tax-advantaged retirement account for self-employed business owners. A solo 401(k) is the same as a large company 401(k) but limited to just the business owner and his spouse. Like a 401(k) from an employer, you may be able to make either pre-tax or after-tax (Roth) contributions and take out 401(k) account loans. Depending on the account provider you choose, your investment choices and costs may vary.
Who Should Get a Solo 401(k)?
Solo 401(k) plans are best for business owners who want the most flexibility in how they save for retirement. Before signing up for a Solo 401(k), you may also want to consider a SEP IRA or SIMPLE IRA as well.
Solo 401(k) plans take more paperwork to get started but offer more flexibility in what you are able to contribute. For example, SEP plans only accept employer contributions, while a solo 401(k) takes contributions from either the employee or employer. SIMPLE IRAs are available to businesses with up to 100 employees. SEP IRAs don’t have that limit.
Can I Manage My Own Solo 401(k)?
Yes, you can manage your own Solo 401(k). As with a self-directed IRA or Roth IRA, you can choose your own investments and make your own decisions when you run your own solo 401(k) account. If you want someone else to manage your investments, consider one of the managed portfolio providers on this list.
How We Chose the Best Solo 401(k) Companies
To choose the best solo 401(k) companies, we looked at 10 top providers of solo 401(k) accounts. In evaluating providers, we focused on pricing, investment options, account features, and trading platforms.
Pricing and fees were the single biggest factor considered, followed by investment choices. The ability to make Roth contributions or take out a 401(k) loan was the third major factor considered, as they may be less important to some investors. Account trading platforms, both online, desktop, and mobile, were also considered but carried less weight, as they are not as important to the typical retirement account investor.
Vanguard. "Fast facts about Vanguard." Accessed December 16, 2020.