Solo 401(k) for S Corp Owners: 2026 Limits and the Year-End Deadline

For an S Corp owner with no employees, a Solo 401(k) is one of the biggest tax-deferred savings options available. For 2026, you can put away up to $72,000, and more if you're 50 or older. The part S Corp owners tend to miss is timing: your own contribution has to come out of your 2026 paychecks, so the plan needs to be set up before your last payroll of the year.

Who can have a Solo 401(k)

A Solo 401(k), which the IRS calls a one-participant plan, covers only the business owner and their spouse. If your spouse works in the business and is on payroll, they can participate too, which roughly doubles what the household can save.

Employees change that. Anyone who works 1,000 hours or more in a year, or at least 500 hours a year for two years in a row under the newer long-term part-time rules, may have to be covered. At that point you need a regular 401(k) plan instead.

2026 Solo 401(k) contribution limits

The IRS limits for 2026 are:

• Employee deferral: $24,500
• Catch-up at age 50 or older: $8,000, or $11,250 if you're 60 through 63
• Total from all sources: $72,000, not counting catch-ups
• Maximum compensation used in the calculation: $360,000

How contributions work for S Corp owners

Everything is based on your W-2 salary from the S Corp. Distributions and the profit on your K-1 don't count. There are two pieces:

• Your deferral, up to $24,500 (plus any catch-up), withheld from your paychecks
• The company's profit-sharing contribution, up to 25% of your W-2 salary

With a $100,000 salary at age 45, that's $24,500 from you plus $25,000 from the company, or $49,500. At age 52 with the same salary, the $8,000 catch-up brings it to $57,500. To reach the full $72,000 without catch-ups, you'd need about $190,000 of W-2 salary.

That ties your retirement savings to your salary decision. A higher salary allows bigger contributions but also means more payroll tax, and your salary still has to be reasonable for the work you do. We cover that balance in our year-end tax planning guide.

Solo 401(k) deadlines for 2026

Your deferrals have to come out of paychecks dated in 2026. That means the plan has to be adopted, and your deferral election in place, before your final 2026 payroll.

You may have read that you can open a Solo 401(k) after year-end and still make deferrals for the prior year. That rule, added in 2022, only covers owners of unincorporated businesses, such as sole proprietors, who have no employees. It doesn't help S Corp owners, whose deferrals have to come from W-2 wages paid during the year.

The company's profit-sharing contribution has more room. It can be deposited after year-end, up to the S Corp's tax return due date including extensions: March 15, 2027, or September 15, 2027 if you extend. A plan adopted after December 31 can still take the 2026 company contribution. It just can't take your 2026 deferrals.

The 2026 Roth catch-up rule

Starting in 2026, if your 2025 Social Security wages from the S Corp were over $150,000, any catch-up contribution you make has to go in as Roth, meaning after tax. If your plan doesn't allow Roth contributions, you can't make catch-ups at all until it's amended. Check your plan documents before your last payroll.

More broadly, most Solo 401(k) plans let you choose Roth for your regular deferrals, and plans can now let the company's contribution be designated Roth as well. Roth money is taxed now and can come out tax-free later, which can make sense in a lower-income year.

Don't miss Form 5500-EZ

Once your plan holds more than $250,000 at year-end, you have to file Form 5500-EZ by the last day of the seventh month after the plan year ends, which is July 31 for a calendar-year plan. The late-filing penalty is $250 a day, up to $150,000 per year, so it's an easy filing to put on the calendar and an expensive one to forget.

Solo 401(k) vs. SEP IRA for S Corp owners

A SEP IRA only allows the company's contribution, up to 25% of your W-2 salary. There's no employee deferral. That gap is large at moderate salaries:

• $80,000 salary: $20,000 in a SEP IRA, or $44,500 in a Solo 401(k)
• $150,000 salary: $37,500 in a SEP IRA, or $62,000 in a Solo 401(k)

A SEP is simpler and can be opened up to the return due date. For most S Corp owners who want to save more than 25% of salary, though, the Solo 401(k) comes out ahead.

California notes

California generally follows the federal rules for 401(k) contributions, so pre-tax deferrals lower your California taxable wages as well. If your business has no employees other than its owners, you don't need to register for CalSavers, the state's retirement program. If you do have employees, offering a qualified plan such as a 401(k) satisfies the CalSavers requirement.

Frequently asked questions

Who qualifies for a Solo 401(k)?

Business owners whose only participants are themselves and their spouses. Employees who meet the hours tests generally have to be covered, which makes it a regular 401(k).

What's the maximum Solo 401(k) contribution for 2026?

$72,000, or $80,000 at age 50 and up, or $83,250 at ages 60 through 63. For an S Corp owner, how much you can actually reach depends on your W-2 salary.

Can I open a Solo 401(k) after December 31 for 2026?

For an S Corp, yes for the company's contribution, but not for your own deferrals, which have to come out of 2026 paychecks.

Do S Corp distributions count toward contributions?

No. Only W-2 wages count.

Setting up a plan before year-end

If you want 2026 deferrals, there isn't much time left. API Accounting, Tax & Advisory can help you size your contribution as part of your retirement planning and make sure the deferrals run through payroll correctly. Contact us before your last payroll of the year.

This article is general information based on federal and California rules as of November 2026. It isn't tax or investment advice for your situation, so talk with a licensed professional before acting on it.