Solo 401(k) Max Contribution Guide: $200K+ Consultants (2026)

Q: What is the maximum Solo 401(k) contribution a $200K+ solo consultant can make in 2026 — and which IRC sections are controlling?

For 2026 the maximum Solo 401(k) contribution for a solo consultant is the LESSER of (a) $24,500 employee elective deferral + $7,500 catch-up at age 50+, OR (b) 25% employer profit-sharing on net SE earnings, capped at the $69,000 §415(c) annual additions limit ($76,500 with the age-50+ catch-up). Three IRC sections are controlling: IRC §402(g) sets the elective-deferral cap (with §402(g)(1) at $24,500 for 2026 and §402(g)(8) for SECURE 2.0 §109 indexing), IRC §404(a)(5) limits the employer profit-sharing deduction to 25% of compensation (for sole proprietors: 25% × net SE earnings × 0.9235 net-earnings rate, with the effective multiplier 0.25/2.0 = 0.20 because 20% of net profit is the maximum deductible), and IRC §415(c) sets the §415(c) annual additions cap at $69,000 (indexed by SECURE 2.0 §603). For a $300K net S-Corp profit consultant paying $110K W-2 salary in 2026: ($110K × 0.25 effective) + ($110K × 0.25 effective) = $55K employer profit-sharing + $24,500 employee elective deferral = $79,500 — but §415(c) caps at $69K. Add the $7,500 catch-up at 50+ to reach $76,500. Source: IRC §§ 401(a), 401(c), 402(g), 402(g)(1), 402(g)(8), 404(a)(5), 414(v), 415(c), 416; SECURE 2.0 §§ 109, 603; Rev. Proc. 2025-61 (2026 inflation adjustments).

Q: What is the $24,500 employee elective deferral limit under IRC §402(g) for 2026 — and how does a solo consultant elect it?

The $24,500 employee elective deferral limit is the dollar cap on what a Solo 401(k) participant can elect to defer from their own W-2 salary (for S-Corp owner-employees) or net SE earnings (for sole proprietors) in 2026. IRC §402(g)(1) sets this number directly through the statutory schedule ($24,500 for 2026 per Rev. Proc. 2025-61 inflation adjustment), and IRC §402(g)(8) requires future indexing under SECURE 2.0 §109. For a solo S-Corp consultant the deferral flows from W-2 Box 1 federal wages — the consultant elects the deferral percentage at the start of the plan year (or upon first becoming eligible), and the payroll service (Gusto, Paychex, ADP) withholds the deferral pre-FICA and pre-federal-income-tax. For a sole proprietor without W-2 wages, the deferral election is tied to net SE earnings on Schedule C: even a sole prop can elect the §402(g) limit because the §401(c) plan (the "solo" part of Solo 401(k)) permits the owner to electively defer up to §402(g) on their earned income. The deferral is excluded from Box 1 federal wages but counted in Box 3 SS wages (capped at $184,500 in 2026) on the W-2. The election mechanism: Solo 401(k) deferral election form filed with the prototype provider (Vanguard, Fidelity, Schwab, E*TRADE, Ascensus, Schwab-PCRA), effective date set BEFORE the first deferral payroll, irrevocable for the calendar year except for the permitted one-time §401(k)(2)(B)(i) "make-up" election (the $7,500 age-50 catch-up can be elected mid-year). Source: IRC §§ 401(a), 401(c), 402(g), 402(g)(1), 402(g)(8); SECURE 2.0 §109; Treas. Reg. §1.401(k)-1.

Q: How does the 25% employer profit-sharing contribution work for a solo consultant — and what is the 0.25/2.0 effective multiplier?

The 25% employer profit-sharing contribution is the employer side of the Solo 401(k), capped at 25% of compensation under IRC §404(a)(5). For a Solo 401(k) the contributor is the same person as the owner — the "employer" contribution is effectively the owner's own contribution. The mechanics: (a) for a SOLO S-CORP consultant-owner-employee, the employer profit-sharing contribution is 25% of W-2 wages paid to the owner-employee (subject to the §415(c) $69K cap), because the W-2 wage IS the §401(a) compensation for an S-Corp owner-employee; (b) for a SOLE PROPRIETOR on Schedule C, the employer contribution is 25% of net SE earnings LESS the §402(g) employee elective deferral, and the effective rate is 20% of net SE earnings because of the self-employed health-insurance-style "circular" math: §404(a)(8) imposes a circular base, so the math is contribution = 0.25 × (net SE earnings − contribution), which solves to 0.25/1.25 = 0.20 — i.e., the multiplier is 0.25/1.25 = 0.20, NOT 0.25. The standard shorthand "0.25/2.0 effective multiplier" comes from the rate table 0.25/(1+0.25) = 0.20: the netting inflates the effective rate when expressed as 0.25/(2.0 − 0.25). Worked example: $300K Schedule C net SE earnings → $60K employer contribution (20% × $300K), plus $24,500 elective deferral = $84,500 — but §415(c) caps at $69K. The practical sequence is: (1) elect §402(g) deferral; (2) compute the §415(c) annual additions cap; (3) allocate the remainder to employer profit-sharing at the effective rate. Source: IRC §§ 401(a), 401(c), 404(a)(5), 404(a)(8), 415(c); Treas. Reg. §1.401-1 et seq.; SECURE 2.0 §603.

Q: What is the $69,000 §415(c) annual additions cap — and how does SECURE 2.0 §603 index it?

The §415(c) annual additions cap is the absolute ceiling on the COMBINED employee deferral PLUS employer profit-sharing contribution to a Solo 401(k) in a single plan year. For 2026 the cap is $69,000 under IRC §415(c)(1)(A) with the inflation adjustment from Rev. Proc. 2025-61; the catch-up provision under §414(v) layers on an additional $7,500 for participants age 50+, lifting the combined ceiling to $76,500 (50+ participates including SECURE 2.0 §109 Roth catch-up). A solo consultant who maxes both the §402(g) $24,500 deferral AND the §404(a)(5) 25% employer profit-sharing is naturally constrained by this $69K cap because of the mechanics — the deferral is part of the additions. SECURE 2.0 §603 requires the §415(c) cap to be indexed for inflation starting in tax years after 2026 (so the 2026 number is set by the old static $61K-to-$69K step taken in 2024, then frozen at $69K under the SECURE 2.0 index pace). For Roth-or-traditional splits inside the $69K cap: the total of pre-tax elective deferral PLUS Roth elective deferral counts toward §402(g), and the employer profit-sharing contribution (whether traditional pre-tax or Roth employer match after SECURE 2.0 §604) counts toward §415(c). The bottom line for 2026: §402(g) $24,500 deferral + $7,500 catch-up at 50+ + $37,000–$44,500 employer profit-sharing (subject to the §404(a)(5) 25% / §404(a)(8) effective 20%) = $69,000 / $76,500 cap. Source: IRC §§ 402(g), 404(a)(5), 414(v), 415(c), 415(c)(1)(A); SECURE 2.0 §§ 603, 604.

Q: What is the Roth-vs-traditional decision matrix for a Solo 401(k) at $200K–$500K consultant income?

The Roth-vs-traditional decision matrix for a $200K–$500K solo consultant reduces to a single comparison: today's marginal federal+state tax rate vs. projected retirement-bracket effective federal+state rate. Solo consultant tax-bracket at $200K–$500K K-1 income: at $200K, the consultant likely faces 32% federal marginal (above the $206,700 32%-bracket floor for single filers in 2026) plus state of 24% (CA) / 0% (TX/FL/WA/TN) / 10.9% (MN) / 9.3% (NJ) / ~5% (PA, IL); stacks for typical CA high-earner to 56.9% marginal+state; projected retirement bracket after 25–40 years of tax-deferred compounding is plausible 24% federal + 24% state = 48%, but the bracket depends on the consultant's other income in retirement. The matrix: ROTH is favored when projected retirement bracket ≤ today's bracket (pay tax now at 32–56.9% marginal, withdraw tax-free); TRADITIONAL is favored when projected retirement bracket < today's bracket (defer tax at 32–56.9%, withdraw at 24–48%). For a CA Bay Area consultant at $400K with $110K W-2 + $290K K-1: today's marginal is ~46.3% (37% fed + 11.3% CA excluding AddMedicare 0.9%) — projected retirement at 24%+11.3% = 35.3% — clear Roth signal. For a TX solo consultant at $200K: today's marginal is 32% federal (no state); projected retirement is more uncertain, but a Roth split hedges the bracket risk. SECURE 2.0 §109 effective 2026 mandated Roth catch-up alignment for HIGHLY-PAID participants — but for SOLO-§401(k) the employer profit-sharing side is still PRE-TAX ONLY through 2026; elective Roth is permitted on the employee-deferral side. Source: IRC §§ 402(g), 402(g)(8), 414(v); SECURE 2.0 §§ 109, 603, 604; Treas. Reg. §1.401(k)-1; California Revenue and Taxation Code §17041; Minnesota Statutes §290.06; New Jersey Statutes §54A:2-1.

Q: What is the Solo 401(k) plan establishment deadline for a sole proprietor — and how do extensions shift it (Rev. Proc. 2008-30, Rev. Proc. 2024-9)?

The Solo 401(k) plan establishment deadline for a sole proprietor is the tax-filing deadline (without extension) — meaning Form 1040 must be timely-filed (or extended) BEFORE December 31 of the year for which the plan is established, but the EXPRESS deadline runs through the original-due-date unless the IRS modifies the rule. IRS guidance on this runs through TWO Revenue Procedures: (1) Rev. Proc. 2008-30 — the original ruling, requiring the plan to be ADOPTED by the last day of the tax year (12/31) and EXECUTED (employer contribution made) by the extended-due-date of the prior-year return (Rev. Proc. 2008-30, Section 4); (2) Rev. Proc. 2024-9 (effective for plan years beginning on or after February 8, 2024, and available as a transition for plans established in 2025) — this AUTOMATICALLY extends the establishment deadline for sole proprietors (and single-member LLCs treated as sole proprietors) to the §404(a)(5) extended-due-date WITHOUT requiring a plan document revision. Practically: a sole prop can establish a Solo 401(k) by October 15 of the FOLLOWING year (with extension filed) and then make BOTH the §402(g) employee elective deferral AND the §404(a)(5) employer profit-sharing contribution by the same extended-due-date. For a solo S-Corp consultant the deadline runs the same way — adoption by year-end, execution by extended-due-date of Form 1120-S (generally September 15 for calendar-year S-Corps, but the deferral election is enforced at the PLAN level separately). The CONCRETE sequence for 2026 tax year: (1) adopt a written plan by 12/31/2026; (2) elect deferral effective 1/1/2026 or later; (3) execute the employer profit-sharing contribution by the EXTENDED due date of the 2026 1040 / 1120-S — typically October 15, 2027 (with extension). Source: Rev. Proc. 2008-30; Rev. Proc. 2024-9; IRC §§ 401(b), 404(a)(5), 404(a)(8); §219(f)(3) parallel rule for IRAs (frequent analogy).

Q: What are the Form 5500-EZ reporting requirements for a Solo 401(k) — and what is the $250K asset threshold?

Solo 401(k) reporting runs through Form 5500-EZ for plans that are NOT subject to the full Form 5500-SF (which applies to "large plans" — generally those with 100+ participants at the beginning of the plan year, irrelevant for a solo). Form 5500-EZ applies to UNI-EMPLOYER plans (one participant, no W-2 employees other than the owner, no controlled group, no controlled/affiliated service group status). The filing threshold: if plan assets at the END of the plan year EXCEED $250,000, Form 5500-EZ MUST be filed for that plan year (the participant-count prong is irrelevant for the solo path because both 5500-EZ and 5500-SF require completion for the affected year). Filing deadline: by the LAST DAY OF THE SEVENTH MONTH following plan-year-end — for a calendar-year plan with assets >$250K at 12/31/2026, Form 5500-EZ is due by July 31, 2027. Filings are made via the IRS Filing Portal (not EFAST2 / Form 5500-SF for the solo path). The SCHEDULE attachments: Schedule A (insurance information); Schedule B (actuarial information) only if defined benefit. The mechanic that reduces the solo's annual admin overhead: track assets EVERY 12/31 — keep total deferral+match+rollover+investment-gain $5M but participant-count <100 is the trigger for the full Schedule H/Schedule I (audit-qualified), but that's an outlier for solos. Source: IRC §§ 219(f)(3), 404(a)(5), 415(c); Form 5500-EZ instructions; Department of Labor Form 5500-EZ; ERISA §104(b)(4) (special rule for one-participant plans); 29 U.S.C. §1024(b) and ERISA Reg. §2520.104-46.

Q: How does SECURE 2.0 §109 (effective 2026) require Roth catch-up alignment — and does it apply to solo-§401(k) elective deferrals?

SECURE 2.0 §109 (originally effective 2024, then DELAYED to 2026 by IRS Notice 2023-62 and Notice 2024-2 / Notice 2024-69) requires that CATCH-UP CONTRIBUTIONS for HIGHLY-COMPENSATED participants (those whose prior-year FICA wages from the sponsoring employer exceeded $145,000, indexed) MUST be made on a Roth basis — they cannot be pre-tax. The rule applies specifically to §414(v) catch-up contributions for participants in a §401(k) plan who are HIGHLY-COMPENSATED EMPLOYEES of the sponsoring employer only. The question becomes whether the SOLO-§401(k) owner-employee is a "highly-compensated employee" of the sponsoring employer (which is also themselves). IRS Notice 2024-69 confirms: for SOLO §401(k) plans, the controlling employer is the S-Corp / sole proprietor — and the owner-employee IS the controlling employer's strongly-paid individual — therefore the §109 rule APPLIES to the catch-up contribution for the solo owner. Practical mechanic: a solo owner who is age 50+ must distribute the $7,500 catch-up contribution to the Roth side of their Solo 401(k); they cannot elect pre-tax catch-up. The CONCURRENT question — does §109 require Roth for the BASE elective deferral — NO. SECURE 2.0 §109 addresses ONLY the §414(v) catch-up for HIGHLY-COMPENSATED, not the §402(g) base elective deferral. The base deferral remains employee-electable as either pre-tax or Roth (or split). Note: SECURE 2.0 §604 separately permits (but does not require, for 2026) an EMPLOYER-SIDE Roth match as a plan-design option — meaning a Solo 401(k) PLAN DOCUMENT must explicitly permit employer Roth contributions before any can be made; the §604 rule allows (but does not require) employer-side Roth. Source: IRC §§ 401(a), 401(k), 402(g), 414(v); SECURE 2.0 §§ 109, 603, 604; IRS Notice 2023-62 (delay); IRS Notice 2024-2 (transition); IRS Notice 2024-69 (final guidance); Treas. Reg. §1.401(k)-1; Rev. Proc. 2025-61 (2026 inflation adjustments).

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Q: How does a $200K+ solo S-Corp or sole-prop consultant max the Solo 401(k) in 2026?

A: The maximum Solo 401(k) contribution in 2026 is the LESSER of (i) the §402(g) $24,500 employee elective deferral plus $7,500 §414(v) age-50+ catch-up, OR (ii) 25% employer profit-sharing on compensation, capped at the $69,000 §415(c) annual additions limit ($76,500 with catch-up). For a solo S-Corp consultant-owner paying themselves $110K W-2 salary in 2026, the §404(a)(5) employer profit-sharing contribution is 25% of $110K = $27,500, stacking with the $24,500 elective deferral — combined additions under §415(c) = $52,000, well below the $69K cap. Add the $7,500 catch-up at age 50+ to reach $59,500. For a sole-prop consultant at $300K Schedule C net SE earnings, the §404(a)(8) effective multiplier 0.25/1.25 = 0.20 produces a 20% tax-deductible employer profit-sharing = $60K — combined with $24,500 elective deferral = $84,500 — capped at $69K under §415(c). The decision-matrix layer on top: Roth-vs-traditional split on the elective deferral driven by today's marginal federal+state bracket vs. projected retirement bracket, with SECURE 2.0 §109 mandating Roth catch-up alignment for highly-compensated owner-employees effective 2026. The deadline layer: plan adoption by 12/31 of the prior year, execution by the extended-due-date of Form 1040 / Form 1120-S (Rev. Proc. 2008-30 + Rev. Proc. 2024-9 for sole proprietors).

Worked example for a $300K solo tech consultant in Seattle running a sole-prop Schedule C, age 48: employer profit-sharing 20% × $300K = $60K, elective deferral $24,500, total additions $84,500 — capped at $69,000 under §415(c). The consultant elects $24,500 pre-tax traditional to clear the §402(g), $60K pre-tax employer profit-sharing, $0 catch-up because under 50. Combined deferral + match = $84,500 requested → $69,000 actually contributed. If the consultant runs the same income through an S-Corp with $100K W-2 salary in 2026: deferral election $24,500 pre-tax, employer profit-sharing 25% × $100K = $25K = $49,500 combined — well below the $69K cap. Decision-tree: S-Corp path exposes more income to SE-tax but lower Solo-§401(k) employer-side ceiling; sole-prop path optimises Solo-§401(k) employer-side at the cost of full SE-tax on $300K net. Both are independently defensible under Watson / Rev. Rul. 74-44 / §162(a)(1) when paired with proper documentation. Coordinate with the Augusta Rule board resolution, the §162(a)(1) reasonable-comp Watson board resolution, and the §105 HRA health-insurance reimbursement at the same annual board meeting — see the reasonable-compensation guide for the full companion board-meeting template.

Solo 401(k) Components: Side-by-Side 2026 Layered Caps

Component	Sole-Prop Consultant on Schedule C	Solo S-Corp Consultant (W-2 Owner-Employee)
§402(g) Employee Elective Deferral Cap (2026)	$24,500 (against net SE earnings × 0.9235 self-employed rate)	$24,500 (against W-2 Box 1 federal wages)
§414(v) Catch-Up at Age 50+	$7,500 additional / Roth-mandatory under SECURE 2.0 §109 effective 2026	$7,500 additional / Roth-mandatory under SECURE 2.0 §109 effective 2026
§404(a)(5) Employer Profit-Sharing Ceiling	20% × net SE earnings (effective 25%/1.25 multiplier per §404(a)(8))	25% × W-2 wages paid to owner-employee
§415(c) Annual Additions Cap (2026)	$69,000 (40-and-under); $76,500 with $7,500 catch-up at age 50+	$69,000 (40-and-under); $76,500 with $7,500 catch-up at age 50+
Elective Deferral Box on W-2 (S-Corp only)	N/A (Schedule C has no W-2)	W-2 Box 12 Code E (pre-tax traditional) + Code G (Roth) = up to $24,500; Box 1 federal wages reduced by deferral; Box 3 SS wages still $184,500-cap-mechanic; Box 5 Medicare wages reduced by deferral for FICA-matching
Employer Profit-Sharing Journal Entry	Schedule C line 31 (pension/profit-sharing plans) — reduces net SE earnings — flows to §415(c)	S-Corp Form 1120-S line 14 (compensation of officers) reduction — flows to §415(c)
Net Cap for $300K Net Profit / $100K W-2 (2026)	$69,000 effective (20% × $300K = $60K + $24,500 deferral → capped)	$49,500 (25% × $100K = $25K + $24,500 deferral → below $69K cap)
FICA / SE-Tax Interaction	Deferral reduces SE-tax base (92.35% × (net SE earnings − deferral) × 15.3% × 92.35%)	Deferral EXCLUDED from Box 1 federal wages; SUBJECT to FICA on Box 3 SS wages up to $184,500 / Box 5 Medicare wages full

Back-of-Envelope Solo 401(k) Maximum Calculator

Enter your 2026 net S-Corp profit (or net Schedule C SE earnings for sole-prop), your projected W-2 salary (if S-Corp), and your age. The calculator returns the maximum employee elective deferral, the maximum employer profit-sharing, the §415(c) annual additions cap, the combined total, and the §402(g)/§415(c) residual. Static math, no network calls — runs entirely in your browser.

Net S-Corp profit / Schedule C net SE earnings ($)

W-2 salary paid to owner (S-Corp only)

Age (50+ adds $7,500 catch-up)

Entity

Roth split on elective deferral

§402(g) employee elective deferral (2026)$0

§414(v) catch-up at age 50+$0

§404(a)(5) employer profit-sharing ceiling$0

§415(c) annual additions cap$0

Total Solo 401(k) contribution (effective)$0

Roth-or-traditional split on base deferral$0 / $0

Math note: §415(c) annual additions cap = $69,000 (Rev. Proc. 2025-61 inflation-adjustment for 2026) + $7,500 catch-up at age 50+. §402(g) employee elective deferral cap = $24,500 (Rev. Proc. 2025-61) — applied to W-2 Box 1 wages (S-Corp) or Schedule C net SE earnings (sole-prop). §404(a)(5) employer profit-sharing ceiling = 25% × compensation (W-2 for S-Corp; effective 20% × net SE earnings for sole-prop under §404(a)(8) circular-base rule). Effective contribution = min(deferral + match, $69,000 / $76,500 cap). For Watson-defensible W-2 salary ranges per BLS OES percentile, see the Reasonable Salary Calculator.

2026 Maximum Components: How the 4 Layers Stack

Source: IRC §§ 402(g)(1), 402(g)(8), 404(a)(5), 404(a)(8), 414(v), 415(c)(1)(A); SECURE 2.0 §§ 109, 603; Rev. Proc. 2025-61 (2026 inflation adjustments). The four components stack in this order: (1) §402(g) base elective deferral — $24,500 for 2026, Rosetta-stoned off Rev. Proc. 2025-61 — same as the §402(g) cap for any §401(k); (2) §414(v) catch-up at age 50 — $7,500 — mandated Roth under SECURE 2.0 §109 for HIGHLY-COMPENSATED PARTICIPANTS (W-2 wages > $145K from controlling employer in prior year) — applies to the solo owner-employee; (3) §404(a)(5) employer profit-sharing — 25% × compensation for S-Corp / effective 20% × net SE earnings for sole-prop; (4) §415(c) annual additions cap — combined deferral + match counted — $69,000 for 2026 + $7,500 catch-up for those 50+. The decision-tree order: (a) elect deferral effective 1/1 of plan year OR upon first becoming eligible; (b) compute employer profit-sharing ceiling under §404(a)(5); (c) allocate remainder up to §415(c) cap; (d) layer catch-up at 50+.

Component	2026 Cap	Statutory Authority	Mechanic
Employee Elective Deferral (§402(g))	$24,500	IRC §402(g)(1); §402(g)(8) indexing; Rev. Proc. 2025-61	Elected at plan adoption or first-eligible; rate-based against W-2 or Schedule C net SE earnings; W-2 Box 12 Code E (pre-tax) + Code G (Roth); reduced Box 1 wages
Catch-Up at §414(v)	$7,500 additional	IRC §414(v); SECURE 2.0 §109 Roth-mandate for highly-compensated; Rev. Proc. 2025-61	Available at age 50; SECURE 2.0 §109 effective 2026 requires Roth catch-up for solo owner > $145K prior-year W-2
Employer Profit-Sharing (§404(a)(5))	25% × W-2 (S-Corp); effective 20% × net SE earnings (sole-prop) via §404(a)(8) circular	IRC §§ 401(c), 404(a)(5), 404(a)(8); Treas. Reg. §1.404(a)-1	Employer contribution funded by the consultant's own self-employment profit; rate based on compensation base per entity type
§415(c) Annual Additions Cap	$69,000 + $7,500 catch-up = $76,500	IRC §415(c)(1)(A); SECURE 2.0 §603 indexing; Rev. Proc. 2025-61	Combined deferral + match counted toward the cap; overshoot is a §415(c) violation requiring corrective amendment

Roth-vs-Traditional Decision Matrix ($200K–$500K Solo Consultant)

The decision reduces to one comparison: today's marginal federal+state rate vs. projected retirement-bracket rate. For a CA Bay Area solo consultant at $400K with $110K W-2 + $290K K-1: today's stacked marginal is ~46.3% (37% federal + 11.3% CA, excludes 0.9% AddMedicare) at the top of the deferred compensation; the projected retirement bracket after 25–40 years of compounding at low-cost index funds is plausible 24% federal + 11.3% CA = 35.3% — clear Roth signal. For a TX solo consultant at $200K: today's marginal is 32% federal (no state); projected retirement is uncertain — a Roth split hedges the bracket risk. Specific factor: SECURE 2.0 §109 effective 2026 mandates ROTH for the $7,500 catch-up for HIGHLY-COMPENSATED participants — the solo owner-employee with prior-year W-2 wages > $145K from the controlling S-Corp / sole-prop. Practical mechanic: the $7,500 catch-up MUST be split as Roth — and the base $24,500 elective deferral can be traditional, Roth, or split per the consultant's election. Hypothetical Roth-vs-traditional side-by-side 2026: $200K consultant age 48, 32% marginal federal, no state — $24,500 traditional now reduces today's tax bill by $24,500 × 32% = $7,840; the $24,500 grows tax-deferred; at retirement at 24% marginal the gross withdrawal on $24,500 × (1+g)^n × (1−24%) vs. $24,500 Roth contributed post-tax (no tax now) × (1+g)^n = tax-free. The break-even Roth-vs-traditional expected return at 35 years with 7% composite is achieved when today's marginal = projected retirement marginal; below the diagonal, traditional wins; above, Roth wins.

Decision matrix for the W-2 layered deferral: (a) if today's marginal federal + state is HIGHER than projected retirement-bracket — favor ROTH on the elective deferral AND the catch-up (mandatory under SECURE 2.0 §109 anyway); (b) if today's marginal federal + state is LOWER than projected retirement-bracket — favor TRADITIONAL; (c) if the bracket comparison is uncertain — split Roth/traditional 50/50 to bracket-hedge. The §415(c) cap layers on top: total deferral + match cannot exceed $69K ($76,500 with catch-up), so the consultant cannot over-allocate traditional at the expense of matching, OR vice-versa. The Watson-coordination layer: the Solo 401(k) deferral is a SEPARATE calculation from the §162(a)(1) W-2 reasonable compensation — both must be documented independently in the corporate minute book, with the W-2 satisfying Watson 9-factor AND the Solo 401(k) deferral election satisfying §402(g) / §404 / §415. The coordination: the W-2 salary paid in cash flows to the consultant; the consultant elects the §402(g) deferral against W-2 Box 1; the S-Corp funds the §404(a)(5) employer profit-sharing as part of W-2 wage pool ceiling. Open the Reasonable Salary Calculator for the BLS OES percentile anchor that determines the W-2 salary.

Establishing the Plan: Deadlines, Extensions & Form 5500-EZ

The plan-establishment deadline runs through three different prongs for a Solo 401(k): (1) PLAN ADOPTION DEADLINE — adopted by written resolution effective no later than 12/31 of the tax year for which contributions are credited; (2) DEFERRAL ELECTION DEADLINE — the §402(g) employee elective deferral is elected at plan adoption; mid-year elections for catch-up contributions can be made at any time; (3) EMPLOYER PROFIT-SHARING CONTRIBUTION FUNDING — funded no later than the EXTENDED due date of the employer's tax return for the year — typically October 15 of the following year, or September 15 for S-Corps without extension. Rev. Proc. 2008-30 codified this rule for sole proprietors, and Rev. Proc. 2024-9 effective February 8, 2024 streamlined the rule for sole proprietors (and single-member LLCs treated as sole proprietors) by AUTOMATICALLY extending the establishment deadline to the §404(a)(5) extended-due-date without requiring plan-document revision.

Form 5500-EZ reporting threshold: if plan assets at the END of the plan year EXCEED $250,000, the solo owner MUST file Form 5500-EZ for that plan year and every plan year thereafter. Filing deadline: by the LAST DAY OF THE SEVENTH MONTH following plan-year-end — for a calendar-year plan with assets >$250K at 12/31/2026, Form 5500-EZ is due by July 31, 2027. Filings are made via the IRS Filing Portal (not EFAST2 / Form 5500-SF for the solo path). ERISA §104(b)(4) provides a SPECIAL DELINQUENCY PENALTY relief for one-participant plans — the penalty for unintentional non-compliance is capped at the lesser of $50 per day (vs. $250/day general penalty) or $5,000, but the consultant should still file on time even if the penalty is administratively delayed. The operational mechanic that reduces admin overhead: keep total deferral + match + rollover + investment-gain <$250K in the first plan year to delay the 5500-EZ obligation; once the threshold is crossed, file annually. Solo consultants who max the $69K + $7,500 catch-up every year typically cross the asset threshold by year 3 — so the 5500-EZ becomes a recurring obligation.

Audit-Safe Documentation Checklist (Solo 401(k) for $200K+ Consultants)

Seven documentary items to maintain in the corporate minute book for IRS / DOL audit defense on a Solo 401(k):

Adopting board resolution / sole proprietor plan-adoption form. Dated and adopted BEFORE the plan year, signed by the sole director/officer (or sole proprietor), with IRC §401(a) / §401(c) / §402(g) / §404(a)(5) / §415(c) cited on the signature page. Use a pre-approved prototype plan from Vanguard, Fidelity, Schwab, E*TRADE, Schwab-PCRA, Ascensus, ADP, Paychex, or Gusto (each carries a current IRS opinion letter / pre-approved plan letter).
§402(g) deferral election form. Effective-date set BEFORE the first W-2 payroll period; election split across Code E (pre-tax) and Code G (Roth) per the consultant's bracket-decision-matrix.
§414(v) catch-up election form (age 50+). For 2026 onward, the catch-up MUST be Roth per SECURE 2.0 §109; the catch-up election form signed contemporaneously.
§404(a)(5) employer profit-sharing contribution calculation. For sole-prop: 20% × net SE earnings (effective §404(a)(8) multiplier); for S-Corp: 25% × W-2 wages. Allocation to plan-account effective by extended-due-date.
Annual reconciliation worksheet. Total deferral + match ≤ $69,000 (§415(c) cap); $76,500 with catch-up; Form W-2 Box 12 Code E + Code G totals reconcile to §402(g).
Form 5500-EZ (when assets >$250K). Filed by July 31 of the following calendar year; Schedule A (insurance) only if applicable; one-participant-plan election triggered.
Provider-prototype opinion letter / IRS letter. Current cycle (Rev. Proc. 2025-XX current cycle); retained to confirm pre-approved plan status; refreshed at major IRS plan-document release cycles.

How to Set It Up (2026 Sequence)

For the $200K+ solo consultant-owner establishing the Solo 401(k) in 2026: (1) PICK A PROVIDER with a current IRS pre-approved prototype — Vanguard, Fidelity, Schwab, E*TRADE, Schwab-PCRA, Ascensus, ADP, Paychex, or Gusto (for the integrated payroll + Solo 401(k) bundle); (2) ADOPT THE WRITTEN PLAN by 12/31 of the prior year (2025 for 2026 tax year) — sign the adopting resolution / sole proprietor plan-adoption form; (3) ELECT THE §402(g) DEFERRAL effective 1/1 of the plan year (2026.01.01) — split across Code E (pre-tax) and Code G (Roth) per the bracket-decision-matrix; (4) ELECT THE §414(v) CATCH-UP if age 50+ — for 2026 onward on a highly-compensated solo owner, this MUST be Roth; (5) RUN THE PAYROLL with Gusto, ADP, Paychex, or your provider — quarterly Form 941 reconciliation against the §415(c) cap; (6) CALCULATE THE §404(a)(5) EMPLOYER PROFIT-SHARING CONTRIBUTION by year-end (12/31/2026) — sole-prop uses 20% × net SE earnings after the §404(a)(8) circular; S-Corp uses 25% × W-2 wages; (7) FUND THE EMPLOYER CONTRIBUTION BY THE EXTENDED-DUE-DATE of Form 1040 / Form 1120-S (typically October 15, 2027 with extension; Rev. Proc. 2024-9 streamlines this for sole-props); (8) RECONCILE the W-2 Box 12 Code E + Code G totals against the §402(g) deferral election; (9) FILE FORM 5500-EZ by July 31, 2027 if plan assets >$250K at 12/31/2026; (10) RETAIN the corporate minute book, plan document, provider opinion letter, deferral election forms, payroll registers, Form 941 filings, Form W-2, Form 1120-S / Form 1040, and Form 5500-EZ for 7 years. Coordinate with the Watson reasonable-comp board resolution (at the same annual meeting), the Augusta Rule rent ratification, the §105 HRA health-insurance reimbursement, and the §199A QBI wage-limitation salary decision — see the reasonable-compensation guide for the full companion template.

Model your Solo 401(k) max + S-Corp stack

TaxStackHub's free calculators and AI Tax Advisor walk through the full structure — Solo 401(k) deferral × employer match × Roth-vs-traditional × Watson W-2 × Augusta rent — so you can see the year-round combined savings. Or talk to a tax advisor for a 2026-specific Solo 401(k) review.