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The solo 401(k): An overlooked tool for your high-income clients
The solo 401(k): An overlooked tool for your high-income clients Nov 10, 2025 1:49:08 PM Solo 401(k)s can create new planning opportunities for advisors. Key takeaways: Solo 401(k)s aren’t just for freelancers—many of your high-income clients may qualify. Your clients can save up to $70,000 (or more with catch-ups). Help your clients combine pre-tax and Roth strategies for flexible tax planning. Identifying side income helps deepen client relationships and provide holistic financial planning. Betterment makes Solo 401(k)s simple with 100% digital setup and funding. When you think of a solo 401(k), you might picture a full-time freelancer or sole proprietor. But the reality is much broader… If your high-income clients with full-time jobs (doctors, attorneys, executives, etc) also have self-employment income, a solo 401(k) can offer powerful financial planning opportunities. For financial advisors, this opens the door to serve a wider range of clients using solo 401(k)s—from a corporate VP who consults on the side, to a physician with hourly contract income, to a creative executive with a side LLC for freelance work. Solo 401(k) value for clients: High contribution limits and tax flexibility A solo 401(k) allows both employee and employer contributions, resulting in higher total limits than traditional IRAs or even many workplace 401(k)s. For 2025, contribution limits for eligible participants are: Employee contribution: Up to $23,500, and if your client is over 50, they can make "catch-up" contributions of up to $7,500 for ages 50-59 and over age 64, and “super-catch-up” contributions of up to $11,250 for ages 60-63. Employer contribution: As the business owner, your client can contribute up to 25% of their net self-employment income (20% for sole proprietors and partnerships). Advisors can guide clients in using a solo 401(k) along with other retirement plans to: Lower taxable income for the current year using a traditional solo 401(k) Build long-term tax diversification through a Roth solo 401(k) Or combine both approaches based on each year’s tax outlook This flexibility makes the solo 401(k) particularly appealing for high earners who’ve already maxed out other retirement vehicles. Solo 401(k) value for advisors: Deeper relationships with high-income clients As a financial advisor, identifying clients with self-employment or side-business income can create deeper, long-term client-advisor relationships. And offering a solo-401(k) is a natural opportunity to ask if a client has side income. By introducing a solo 401(k) , advisors can: Show clients that you offer proactive planning solutions Differentiate your practice by uncovering overlooked retirement opportunities Demonstrate your ability to coordinate tax and investment strategies If a client is interested, you are in a position to guide them through determining eligibility, selecting contribution levels, and coordinating with tax professionals to help them get the most from their solo 401(k). What about enrollment? Betterment has you covered Setting up a solo 401(k) requires some administrative steps—such as adopting a plan document, establishing a trust account, and filing Form 5500-EZ once plan assets exceed $250,000. However, these requirements are straightforward with the right support. Betterment’s advisor platform helps streamline solo 401(k) account setup and administration, providing you an all-digital solo 401(k) designed to help you deliver exceptional value to your self-employed clients. Digital account opening: Skip the hassle with fully digital account creation, including e-signature on plan adoption agreements. Your clients can set up or convert an existing plan quickly, with zero fees for plan establishment. Digital contributions: Fund in-platform—no more mailing in checks. We accommodate ACH and internal transfers for employee and employer contributions, and contributions are automatically tracked to simplify tax season. Plus, new accounts can enjoy up to a $1,500 tax credit over three years with auto-enrollment. Roth and traditional tax strategies: Offer both Roth and traditional contribution options, giving your clients the flexibility to choose tax-free growth or immediate tax savings—whichever approach is best for their retirement. See how to offer Betterment’s solo 401(k) to your clients today.
