Only W-2 wages count for a Solo 401(k) — S-Corp distributions do not. Your salary sets your ceiling.
S-Corp note: the owner contribution is capped at 25% of your W-2 salary. If your salary is set low to save payroll tax, it also shrinks your retirement ceiling. Salary design is part of the plan.
Educational estimates only, based on 2026 IRS limits ($24,500 employee / $72,000 combined). Your real numbers depend on your full facts — entity, payroll, other plans, Massachusetts-specific rules. Polanco Advisory Group provides tax and plan-administration guidance; we do not sell investments or give investment advice. Book a consultation for a real analysis.
S-Corp and partnership owners: the plan must exist and your deferral election must be signed by December 31, 2026 — and deferrals only come out of payroll you actually run this year. Starting in the fall beats scrambling in December.
Sole proprietors get extra room: for a first-year plan, you can open and fund it as late as the April tax deadline for the prior year. But the owner-side contribution still rewards planning before December 31.
Opening a Solo 401(k) means signing five documents. Here is what each one actually does — and what we prepare with you:
Where the plan is designed: eligibility, pre-tax vs. Roth, loans, after-tax contributions. Every checkbox here is a decision that matters later.
The IRS-pre-approved master text your elections plug into. You don't edit it — but your plan lives inside it.
Creates the trust that legally holds the plan's money, with you as trustee. Retirement funds never sit in your personal name.
Opens the actual investment account under the plan — using the business EIN, never your Social Security number.
The optional rider that turns on the Roth side of the plan. Skipping it can lock high earners out of catch-up contributions under the 2026 rules.
We prepare and walk you through all five — most owners never touch more than the signature pages.
We check eligibility, design the plan around your entity and salary, handle the paperwork and deadlines, wire it into payroll, and keep it compliant every year at tax time. You keep full control of the account and the investments.