Account holders at Directed IRA can use Solo 401(k)s to invest in alternative assets such as real estate, private funds, crypto, and more. A self-directed Solo 401(k) gives self-employed business owners unparalleled control over their retirement planning.
A Solo 401(k), also known as an individual 401(k) or one-participant plan, is a retirement plan designed for self-employed business owners with no employees (other than spouse, family, partners). If you’re both the business owner and sole employee, you have the flexibility to design the plan as generously as you wish, since all contributions go directly to your own account. A Self-Directed Solo 401(k) lets you invest your account(s) in assets outside of the stock market (real estate, private companies, priviate funds, syndications, crypto). Solo 401(k)s are ideal for self-employed investors looking to contribute more to their retirement account each year. In 2025, the total contribution limit is $70,000 per participant, significantly higher than the $7,000 cap for IRAs. And if you are married and your spouse is an employee, they could also contribute $70,000 to their own solo 401(k) accounts, making total contributions of $140,000 per year. A Solo 401(k) offers the flexibility to maintain both Traditional (tax-deferred) funds and Roth (tax-free) funds in separate accounts. Additionally, you have the option to convert Traditional Solo 401(k) funds into Roth Solo 401(k) funds.
Annual Account Fee (first account) — $495
Annual Account Fee (additional accounts) — $295
Full Service Custodial
Trustee/Plan Administrator
Client is Trustee and Plan Administrator.
Custodian
Directed Trust Company named as Custodian.
Bank Account Option
Transactions will be made through an account held with Directed Trust Company.
Checkbook Control
Client can have a bank account for checkbook control funded from your Custodial Account.
Record Keeping Responsibilities
Directed Trust Company handles all recordkeeping and IRS filings required of the plan.
Annual Fee
$495 for the first account under the plan,
$295 for subsequent accounts.
Form 5500 EZ: Plan administrators must file Form 5500 EZ with the IRS if their Solo 401(k) plan’s combined asset value exceeds $250,000. For plans operating on a calendar year, the filing deadline is July 31st.
Form 1099-R: This form is issued whenever funds are withdrawn from a retirement plan or during a Roth conversion. The filing deadline is January 31st.
Participant Loan: Solo 401(k) participants can take out a loan up to $50,000 or 50% of their available account balance, whichever is less. The interest rate is set at Prime +2%. Loans must be repaid within 5 years, with payments made at least quarterly.
New Solo 401(k) Set-Up Deadline: For S-Corp owners the deadline to make employee and employer contributions is Dec 31 of the tax year. You can set-up by April 15 (plus extensions) of the following year and still make employer contributions. For sole proprietors, the deadline to establish a solo 401(k) for the prior year is April 15. So for 2024 contributions the deadline to establish the plan is April 15, 2025 (no extensions).
Employee Contribution Reporting Deadline: Employee contributions must be reported via Form W-2, which is due by January 31st. However, contributions can be made up until the company’s tax return is filed (including extensions).
Contribution Deadlines: By staying on top of these deadlines and requirements, you can ensure your Solo 401(k) is properly managed and compliant. Coordinate with your accountant or CPA as to the deadlines, qualifications, and reporting to ensure compliance.
• Sole Proprietorship, Single-Member LLC, or C-Corporation: Employee and Employer Contributions are due by April 15th, with the option to extend by filing a tax extension.
• S-Corporation or Partnership LLC: Employee and Employer Contributions are due by March 15th, with the option to extend by filing a tax extension. Keep in mind the employee contributions are report on form W-2 due by Jan 31 so those need to be accounted for earlier than when the funds are due to be contributed.
A Solo 401(k) is a retirement plan set up by a business owner to benefit its employee(s). For example, if Sally Smith owns and operates Sally Smith, Inc., she can establish a Solo 401(k) for herself as the sole employee. If her spouse works for the business, they can also participate and have their own account under the same plan. Here’s how Sally can set up a Solo 401(k):
The Solo 401(k) is designed exclusively for business owners with no full-time employees, apart from the owner(s) and their spouse. Companies may employ part-time staff (working fewer than 1,000 hours per year) or individuals under the age of 21 without jeopardizing their eligibility for a Solo 401(k). However, if any employee aged 21 or older works more than 1,000 hours in a calendar year, the Solo 401(k) will no longer qualify (or even a part-time employee who has worked past 3 years). At that point, the plan must either be converted into a standard group 401(k) with ERISA protections and made available to all employees, or the Solo 401(k) can be frozen, allowing existing funds to remain invested without new contributions from the business owner. Learn more about IRS rules and regulations for One Participant 401k plans, here.
If you are employed by a company where you are not an owner and participate in its 401(k) or another employer-sponsored plan, you can still set up a separate Solo 401(k) if you own a separate business or engage in self-employment. However, keep in mind that contribution limits for employee contributions are cumulative. When contributing to your Solo 401(k), you must factor in the contributions you and your employer have already made to your company’s 401(k) plan to ensure you stay within the overall limit.
Absolutely. Account holders at Directed IRA have full control over their Solo 401(k) investments and can invest in any asset allowed by law. For example, many of our clients use Solo 401(k)s to invest in real estate, private funds and syndications, or provide loans through secured notes, generating steady returns for their retirement accounts. Popular self-directed investments include:
Both account types are powerful retirement savings tools, but differ in several key ways:
Participants in a Solo 401(k) can roll over most qualified retirement accounts, including Traditional IRAs, SEP IRAs, other 401(k)s, and pensions. However, rollovers are not allowed for:
To roll over funds from an existing account (e.g., a former employer’s 401(k) or traditional IRA), you need to submit a direct rollover or transfer request.
Contributions to a Solo K can be made as an employee and employer of the plan.
Directed Trust Company
3033 N Central Ave STE 400,
Phoenix, AZ 85012
Manage Your Account
Contact Us
8 AM-5 PM (Mon-Fri) Arizona MST [email protected]
P: 602.899.9396
F: 602.899.9641
Start Self-Directing
Account Strategies
Who We Are
Who we Serve
Forms
Get Help
Directed IRA is a Tradename of Directed Trust Company. Directed Trust Company performs the duties of a directed custodian, and as such does not provide due diligence to third parties on prospective investments, platforms, sponsors or service providers, and does not sell investments or provide investment, legal, or tax advice. Directed Trust Company is not an FDIC-insured financial institution. Alternative investments are not insured by the FDIC; are not deposits or other obligations of, or guaranteed by Directed Trust Company or any of its divisions; and are subject to investment risks, including possible loss of the principal amount invested. While uninvested funds in certain types of Directed Trust Company accounts may be eligible for FDIC pass-through deposit insurance, certain conditions must be satisfied for such insurance coverage to apply. 2025 Directed Trust Company
Mat Sorensen, Attorney, CEO, and Founder of Directed IRA, wrote the #1 book on self-directed IRAs – selling over 50,000 copies nationwide. The Self Directed IRA Handbook is a comprehensive guide written for both investors and advisors alike. Download your free copy today!
