A 67-Year-Old Solo 401(k) Holder Just Found $234,000 of Additional Roth Conversion Headroom Most Self-Employed Retirees Miss

A 67-year-old with $185,000 net self-employment income and a large pre-tax Solo 401(k) can contribute as both employee and employer. For 2026, the employee elective deferral limit is $24,500, with an $8,000 catch-up for eligible ages, and the overall annual additions ceiling is $72,000 before catch-ups. The employer profit-sharing amount is roughly 20% of net self-employment earnings after the deductible portion of SE tax, producing about $34,000 to $37,000 on $185,000 of net SE income. Combining these layers yields about $67,500 to $69,500 of annual capacity, which can total about $234,000 over three working years. SECURE 2.0 Section 604 removed the requirement that employer contributions be pre-tax, allowing Roth designation of the employer portion at contribution time if the plan document permits it, otherwise recordkeepers may default to pre-tax.

"A Solo 401(k) holder operating as a sole proprietor wears two hats: employee and employer. The IRS lets you contribute under both. For 2026, the employee elective deferral limit is $24,500, the catch-up for participants age 50 to 59 and 64 or older is $8,000, and the overall annual additions ceiling is $72,000 before catch-ups. The employer side, calculated as roughly 20% of net self-employment earnings after the deductible portion of SE tax, supplies the bridge between the deferral and the overall cap."

"On $185,000 of net SE income, the employer's profit-sharing capacity runs $34,000 to $37,000. Stack the layers: $24,500 deferral, plus $8,000 catch-up, plus roughly $35,000 from the employer side. Annual capacity lands around $67,500 to $69,500. Across the three working years from 67 through 69, with inflation adjustments to the deferral and catch-up limits in 2027 and 2028, the cumulative figure approaches $234,000."

"SECURE 2.0 Section 604 eliminated the requirement that employer matching and profit-sharing contributions be made on a pre-tax basis. Every dollar in the stack above can be designated Roth at the moment of contribution, provided the Solo 401(k) plan document permits it. Older boilerplate documents often do not, and the recordkeeper will default the employer piece to pre-tax unless instructed otherwise."

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