Wall Street Pushes Solo 401(k)s as More Americans Work for Themselves (bloomberg.com)
(Friday January 23, 2026 @05:40PM (msmash)
from the match-yourself dept.)
- Reference: 0180642900
- News link: https://news.slashdot.org/story/26/01/23/1218254/wall-street-pushes-solo-401ks-as-more-americans-work-for-themselves
- Source link: https://www.bloomberg.com/news/features/2026-01-23/solo-401-k-s-go-mainstream-as-wall-street-targets-self-employed-americans
An anonymous reader shares a report:
> A niche retirement plan favored by freelancers is [1]quickly becoming a hot Wall Street sales pitch , as more and more Americans look for ways to shelter a bigger chunk of their paychecks from taxes. Known as solo 401(k)s, they allow the self-employed to contribute $72,000 a year into tax-advantaged retirement accounts. That's nearly three times the maximum for typical salaried workers in the US.
>
> While they've existed for decades serving a workforce that often struggled to earn enough to max out those contributions, wealth planners like JPMorgan Chase & Co. and Betterment are now racing to tap into burgeoning demand from a newer, and wealthier cohort: Post-pandemic contractors and self-employed DIY savers looking to shelter more income, grow assets tax-deferred or tax-free, all with the click of a button.
>
> The pitch is simple: Because of a quirk in the tax code, self-employed workers effectively contribute twice to their 401(k)s -- once as an employee on their own behalf and then again as a business owner making matching contributions. The platforms take care of the paperwork and clients get institutional-level tax planning and investment flexibility.
More than three-quarters of America's record 36 million small businesses now have just a single employee, the owner. Cerulli Associates projects that total 401(k) plans in the U.S. will surpass 1 million by 2030, and the fastest growth is expected in sub-$5 million "micro" accounts.
[1] https://www.bloomberg.com/news/features/2026-01-23/solo-401-k-s-go-mainstream-as-wall-street-targets-self-employed-americans
> A niche retirement plan favored by freelancers is [1]quickly becoming a hot Wall Street sales pitch , as more and more Americans look for ways to shelter a bigger chunk of their paychecks from taxes. Known as solo 401(k)s, they allow the self-employed to contribute $72,000 a year into tax-advantaged retirement accounts. That's nearly three times the maximum for typical salaried workers in the US.
>
> While they've existed for decades serving a workforce that often struggled to earn enough to max out those contributions, wealth planners like JPMorgan Chase & Co. and Betterment are now racing to tap into burgeoning demand from a newer, and wealthier cohort: Post-pandemic contractors and self-employed DIY savers looking to shelter more income, grow assets tax-deferred or tax-free, all with the click of a button.
>
> The pitch is simple: Because of a quirk in the tax code, self-employed workers effectively contribute twice to their 401(k)s -- once as an employee on their own behalf and then again as a business owner making matching contributions. The platforms take care of the paperwork and clients get institutional-level tax planning and investment flexibility.
More than three-quarters of America's record 36 million small businesses now have just a single employee, the owner. Cerulli Associates projects that total 401(k) plans in the U.S. will surpass 1 million by 2030, and the fastest growth is expected in sub-$5 million "micro" accounts.
[1] https://www.bloomberg.com/news/features/2026-01-23/solo-401-k-s-go-mainstream-as-wall-street-targets-self-employed-americans
Itâ(TM)s more about a positive relationship. (Score:2)
by shess ( 31691 )
The fact that the person can contribute as both the employer and employee isnâ(TM)t really where the win is. The win is where the employer is actively trying to provide positive perks for the employee. Many major tech companies have equally as good 401k provisions (where you can reach the statutory max) because they are trying to provide good perks without increasing salaries. But at other companies, the 401k can have meager matches with annoying vesting provisions and terrible load funds.
Quirk in the tax code (Score:2)
by PseudoThink ( 576121 )
One of many such quirks which are absolutely, definitely not intentional nor contributing to widening the economic class gaps or tax burden shouldered by those with the least.
IRA??? (Score:1)
Why call it a 401(k)? It's an Individual Retirement Account, aka an IRA.
It is clearly not already authorized by Section 401, subsection (k) of the 1978 version of the Internal Revenue Code.
Re: (Score:3)
It sounds like you can get some tax advantages that are specific to 401(k) if you, as a business, decide to do 100% unlimited matching for your you, as the employee, allowing you to get 401(k) advantages but with twice the effective limit.
Re: (Score:2)
Something like this. You can contribute. Your employer (you) can contribute a matching amount.
I'll have to check the details with my accountant. If she hasn't skipped to The Caymans with my savings account yet.
Re: (Score:2)
Check if it is a SEP. I did one eons ago and the limits are 25% of salary up to the specified limit of 72K. I don't remember it being called a 401K back when I did it. There are some rules, but they usually work great for freelancers. I had some good years where I put away a decent amount and other years that were quite sparse. Like most retirement things easy to raise/lower contribution depending on how good a year you have, which for freelancers tends to be volatile.
I want to pay my fair share. (Score:2)
I'll make you a deal, I'll pay the same rate Elon pays.
Done and done.
Re: IRA??? (Score:2)
Nope. IRA has a much lower contribution limit and SEC places tighter regulations on what kind of assets you can hold in your portfolio. You can put practically any kind of investment into an IRA that you'd otherwise have in a retail trading account.
It's in a bit of a weird place because your employer can contribute a much larger dollar figure into your 401k than you can. But if you're self-employed, you can do the same.
Most brokerage firms charge employers money for 401k plans, and the better ones aren't ch