by
Garrett Clark
Retirement Planning
Retroactive First-Year Contributions: Leveraging New Solo 401(k) Opportunities
Missed contributing to your Solo 401(k) last year? You might still have time. Thanks to retroactive first-year contributions, self-employed individuals can now open a Solo 401(k) and make contributions for the previous tax year—even after December 31. In this blog, we explain how this unique window of opportunity works, who qualifies, and how it can significantly boost your retirement savings and tax advantages. If you're self-employed and didn’t plan ahead, you’ve still got a powerful second chance.
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What Are Retroactive First-Year Contributions?
Retroactive contributions refer to the ability to establish a Solo 401(k) plan and make contributions for the previous tax year, even if the plan wasn't set up by the end of that year. Traditionally, to contribute to a Solo 401(k) for a specific tax year, the plan had to be established by December 31 of that year.
However, under the SECURE Act 2.0, the rules have changed:
Solo 401(k) plans can now be set up and funded retroactively until the business's tax filing deadline, including extensions.
Employer contributions and profit-sharing contributions can be made retroactively for the previous tax year.
Salary deferrals (employee contributions), however, must still be made by December 31 of the applicable tax year.
What Are Retroactive First-Year Contributions?
Retroactive contributions refer to the ability to establish a Solo 401(k) plan and make contributions for the previous tax year, even if the plan wasn't set up by the end of that year. Traditionally, to contribute to a Solo 401(k) for a specific tax year, the plan had to be established by December 31 of that year.
However, under the SECURE Act 2.0, the rules have changed:
Solo 401(k) plans can now be set up and funded retroactively until the business's tax filing deadline, including extensions.
Employer contributions and profit-sharing contributions can be made retroactively for the previous tax year.
Salary deferrals (employee contributions), however, must still be made by December 31 of the applicable tax year.
“Just because the calendar turned doesn’t mean the opportunity passed, Solo 401(k)s let you rewrite last year’s financial story.”
Garrett Clark
Director of Sales
Key Deadlines to Know
To maximize the benefit of retroactive contributions, it's essential to understand the timing:
Business tax filing deadline (without extensions): April 15, 2025
Business tax filing deadline (with extensions): October 15, 2025
If you file for an extension, you could effectively set up and contribute to a Solo 401(k) for the 2024 tax year as late as October 15, 2025, significantly increasing your flexibility in managing tax liabilities and retirement savings.
Why Retroactive Contributions Matter
Tax Savings
By making retroactive contributions, you can:
Lower your taxable income for the previous year
Potentially reduce your tax bracket
Deferr more of your income into a tax-advantaged account
2. Catch-Up for Missed Savings
If you didn't set up a Solo 401(k) by the end of last year, retroactive contributions give you a second chance to capitalize on tax-deferred growth and compound interest.
3. More Time to Save
The ability to contribute retroactively allows business owners to align their retirement savings with their cash flow. You can assess your year-end financials and decide how much to contribute after reviewing your tax situation.
4. Maximized Contributions
Solo 401(k) plans offer higher contribution limits than many other retirement plans:
Employee deferrals: Up to $23.500 in 2025 (or $30,500 for those aged 50+)
Employer profit-sharing contributions: Up to 25% of business income
Combined maximum contribution (including catch-ups): Up to $69,000 in 2025 (or $76,500 for those aged 50+)
This means you could contribute tens of thousands of dollars to reduce taxable income and grow retirement savings - even after the year ends.
Is It Worth It?
For freelancers and small business owners, retroactive first-year contributions to a Solo 401(k) offer a powerful combination of flexibility, tax savings, and retirement growth. Being able to establish and fund a plan retroactively gives business owners more time to plan strategically and optimize their finances. If you're self-employed and looking to maximize your retirement savings while lowering your tax bill, exploring retroactive contributions to a Solo 401(k) could be one of the smartest financial moves you make this year.
For more information, visit www.survival401k.com or to schedule a consultation!
Key Deadlines to Know
To maximize the benefit of retroactive contributions, it's essential to understand the timing:
Business tax filing deadline (without extensions): April 15, 2025
Business tax filing deadline (with extensions): October 15, 2025
If you file for an extension, you could effectively set up and contribute to a Solo 401(k) for the 2024 tax year as late as October 15, 2025, significantly increasing your flexibility in managing tax liabilities and retirement savings.
Why Retroactive Contributions Matter
Tax Savings
By making retroactive contributions, you can:
Lower your taxable income for the previous year
Potentially reduce your tax bracket
Deferr more of your income into a tax-advantaged account
2. Catch-Up for Missed Savings
If you didn't set up a Solo 401(k) by the end of last year, retroactive contributions give you a second chance to capitalize on tax-deferred growth and compound interest.
3. More Time to Save
The ability to contribute retroactively allows business owners to align their retirement savings with their cash flow. You can assess your year-end financials and decide how much to contribute after reviewing your tax situation.
4. Maximized Contributions
Solo 401(k) plans offer higher contribution limits than many other retirement plans:
Employee deferrals: Up to $23.500 in 2025 (or $30,500 for those aged 50+)
Employer profit-sharing contributions: Up to 25% of business income
Combined maximum contribution (including catch-ups): Up to $69,000 in 2025 (or $76,500 for those aged 50+)
This means you could contribute tens of thousands of dollars to reduce taxable income and grow retirement savings - even after the year ends.
Is It Worth It?
For freelancers and small business owners, retroactive first-year contributions to a Solo 401(k) offer a powerful combination of flexibility, tax savings, and retirement growth. Being able to establish and fund a plan retroactively gives business owners more time to plan strategically and optimize their finances. If you're self-employed and looking to maximize your retirement savings while lowering your tax bill, exploring retroactive contributions to a Solo 401(k) could be one of the smartest financial moves you make this year.
For more information, visit www.survival401k.com or to schedule a consultation!
What Are Retroactive First-Year Contributions?
Retroactive contributions refer to the ability to establish a Solo 401(k) plan and make contributions for the previous tax year, even if the plan wasn't set up by the end of that year. Traditionally, to contribute to a Solo 401(k) for a specific tax year, the plan had to be established by December 31 of that year.
However, under the SECURE Act 2.0, the rules have changed:
Solo 401(k) plans can now be set up and funded retroactively until the business's tax filing deadline, including extensions.
Employer contributions and profit-sharing contributions can be made retroactively for the previous tax year.
Salary deferrals (employee contributions), however, must still be made by December 31 of the applicable tax year.
“Just because the calendar turned doesn’t mean the opportunity passed, Solo 401(k)s let you rewrite last year’s financial story.”
Garrett Clark
Director of Sales
Key Deadlines to Know
To maximize the benefit of retroactive contributions, it's essential to understand the timing:
Business tax filing deadline (without extensions): April 15, 2025
Business tax filing deadline (with extensions): October 15, 2025
If you file for an extension, you could effectively set up and contribute to a Solo 401(k) for the 2024 tax year as late as October 15, 2025, significantly increasing your flexibility in managing tax liabilities and retirement savings.
Why Retroactive Contributions Matter
Tax Savings
By making retroactive contributions, you can:
Lower your taxable income for the previous year
Potentially reduce your tax bracket
Deferr more of your income into a tax-advantaged account
2. Catch-Up for Missed Savings
If you didn't set up a Solo 401(k) by the end of last year, retroactive contributions give you a second chance to capitalize on tax-deferred growth and compound interest.
3. More Time to Save
The ability to contribute retroactively allows business owners to align their retirement savings with their cash flow. You can assess your year-end financials and decide how much to contribute after reviewing your tax situation.
4. Maximized Contributions
Solo 401(k) plans offer higher contribution limits than many other retirement plans:
Employee deferrals: Up to $23.500 in 2025 (or $30,500 for those aged 50+)
Employer profit-sharing contributions: Up to 25% of business income
Combined maximum contribution (including catch-ups): Up to $69,000 in 2025 (or $76,500 for those aged 50+)
This means you could contribute tens of thousands of dollars to reduce taxable income and grow retirement savings - even after the year ends.
Is It Worth It?
For freelancers and small business owners, retroactive first-year contributions to a Solo 401(k) offer a powerful combination of flexibility, tax savings, and retirement growth. Being able to establish and fund a plan retroactively gives business owners more time to plan strategically and optimize their finances. If you're self-employed and looking to maximize your retirement savings while lowering your tax bill, exploring retroactive contributions to a Solo 401(k) could be one of the smartest financial moves you make this year.
For more information, visit www.survival401k.com or to schedule a consultation!