Deadline Drama: Setting Up Your Solo 401(k) Before December 31st

The clock is ticking—and if you’re self-employed, December 31st isn’t just the end of the year, it’s your final chance to unlock powerful tax advantages with a Solo 401(k). In this blog, we break down exactly what you need to do to open your plan before the deadline, how it can slash your tax bill, and why acting now can set you up for long-term financial success. Don’t let procrastination cost you thousands—beat the deadline and take control of your retirement future.

Search

Any Question?
Let’s talk

Schedule a Session

If you're self-employed and planning to supercharge your retirement savings (and maybe even slice your tax bill), there's one date you don't want to miss:

December 31st.

Unlike your average Tuesday, this deadline can seriously impact your financial future, especially if you're eyeing the perks of a Solo 401(k).

So, what's the big deal? Let's break down the drama.

The Deadline That Isn't Just a Suggestion

Here's the kicker: If you want to take advantage of a Solo 401(k) for the current tax year, you must establish the plan by December 31st. That means the paperwork needs to be done, signed, and timestamped. Even if you don't contribute immediately, you've locked in your ability to make tax-deductible contributions for the year - a massive win.

Note: This rule changed in 2020. Before then, you had to both open and fund the account by year-end. Now, you just need to open it. Funding can happen by your tax deadline (plus extensions). Progress!

Why Does This Matter So Much?

Because the Solo 401(k) is one of the most powerful tax-saving tools for self-employed people, especially if you're a high earner or have variable income.

Tax-deferred contributions? Check.
Roth options? Yep, if your provider offers it.
Higher contribution limits than a SEP IRA? Absolutely.
Spouse contributions if they help with the business? You bet.

“Miss the deadline, miss the benefits. Your future self will thank you for starting today.”

Garrett Clark

Director of Sales

But here's the catch: Miss that December 31st window, and those perks vanish for the year. No Solo 401(k) party for you.

Real-World Example: The Freelancer Tax Freakout

Let's say you're a freelancer who crushed it this year. You realize in late December that your tax bill is going to hurt. You scramble for ways to reduce your taxable income, and boom - the Solo 401(k) enters the chat. If you set it up before the ball drops on New Year's Eve, you can:

Deduct up to $23,000 (employee side)
Add another 25% of your net self-employment income (employer side)
Potentially slash thousands off your tax bill

But if you didn't set it up by December 31st? Your options narrow fast.

The Bottom Line

The Solo 401(k) is a beast of a retirement plan, but it doesn't wait around. December 31st is the gatekeeper to all its juicy benefits - and once the clock strikes midnight, there's no going back. So if you're self-employed and you want more money in your future (and less in Uncle Sam's pocket), set that plan up now. Your future self-sipping coffee on a beach somewhere, will thank you.

Visit www.survival401k.com for more information!