Self-Directed IRA & Solo 401(k) Contribution Limits

Both IRAs and Solo 401(k) plans are great options to help people prepare for retirement. However, account holders aren’t allowed to contribute more than a certain amount each year. Understanding IRA and Solo 401(k) contribution limits is essential if you want to avoid tax penalties.

Are Self-Directed IRA Contribution Limits Different From a Standard IRA?

Despite the differences between a standard IRA and a Self-Directed IRA, limits on contributions aren’t among them: Whether you have a standard or Self-Directed IRA, the max contribution is the same.

Does it Matter Whether You Have a Traditional or Roth IRA?

No. The Self-Directed Roth IRA contribution limits are the same as those for a Traditional Self-Directed IRA.

What Are the Solo 401(k) and Self-Directed IRA Limits?

As of 2024, the max contribution to a Self-Directed IRA is $7,000 per year for those younger than age 50. The amount individuals age 50 and over can contribute is $8,000. For SEP IRAs, the limit is $69,000.

For Solo 401(k)s, the limit is $69,000 for those younger than 50 and $76,500 for those 50 or older. Your self-employment income will determine if you're able to contribute the maximum amount. Feel free to use our Solo 401(k) Contribution Calculator to help you determine your maximum contribution.

Here's a snapshot of the contribution limits:

How Do Self-Directed Solo 401(k) Contribution Limits Work?

The maximum Solo 401(k) contribution can be confusing because, with a Solo 401(k), the account holder will be contributing in two different capacities, as both the employee and the employer.

In the employee role, you can contribute up to $22,500 in 2023 or $23,000 in 2024. For those 50 or older, the Self-Directed 401(k) limits allow for an additional $7,500 in both 2023 and 2024.

When acting as the employer, you can also contribute up to 25% of your net self-employment income.

The two parts are added together to determine the overall annual Solo 401(k) contribution.