A solo 401(k) is one of the strongest retirement tools available to a store owner, freelancer or consultant with no employees, because it lets you contribute as both the employee and the employer. The hard part is picking the provider. The plan itself is defined by the IRS, so the real differences come down to fees, Roth features, loans, paperwork and what happens when your business grows.
I wrote this guide at Ecommerce Paradise to walk through those differences using the providers’ own pages, which I read this month.
I have sold online since 2010. Many owners end up with an expensive or awkward account because it was the first one they found. If you are not sure whether a solo 401(k) is the right plan in the first place, my guide to the best retirement accounts for business owners compares the options. This article assumes you have already decided a solo 401(k) fits and want to choose where to open it.
I am not going to name one provider as the winner. Providers change their fee schedules, and what is best for a person who wants loans is different from what is best for someone who wants the simplest setup.
I show you what I verified for three well-known providers, then give you a checklist to evaluate any provider, and the numbers you need from the IRS for 2026. If you are new to investing overall, start with how to start investing.
Disclosure: I am not a registered investment adviser, broker-dealer or financial advisor, and this article is education, not personalized financial advice. Ecommerce Paradise may earn a commission if you request offers through the partner tools on this page, at no extra cost to you. Investing involves risk, including the possible loss of principal, and past performance does not guarantee future results. Confirm tax and contribution rules with a qualified tax professional. Information in this article is current as of October 2026.
Solo 401(k) Providers Compared
The table below shows what each provider says on its own solo 401(k) page, as I read it on October 12, 2026. The providers do not describe their plans in identical terms, so where a page did not say something, I say so instead of guessing. Take it as a starting point and confirm the current terms before you open an account.
| Provider | Fees stated on its page | Roth option | Loans | Other points from the page |
|---|---|---|---|---|
| Schwab Individual 401(k) | No fee to open or maintain; $0 minimum opening deposit; other account fees, fund expenses and commissions may apply | Roth contributions available; Roth employer contributions allowed | Not permitted | No in-plan Roth conversions; paperwork includes an account application and adoption agreement |
| Fidelity Self-Employed 401(k) | No opening cost, closing cost or annual fee; investment expenses and commissions may still apply | Roth option available for employee salary deferrals only | Not offered | No in-plan Roth conversion; hardship withdrawals not offered; can transfer in a non-Fidelity self-employed 401(k) |
| E*TRADE Individual 401(k) | Plan fees not listed on the page I read; $0 commissions on online U.S.-listed stock, ETF, mutual fund and options trades (options contract fees apply) | Traditional, Roth or both for salary deferrals | Available from traditional and Roth accounts | Open through a qualified retirement plan application; page still showed some 2025 limits |
I took the Schwab details from the Schwab Individual 401(k) page. The E*TRADE details come from the E*TRADE Individual 401(k) page. The Fidelity details come from the Self-Employed 401(k) page on fidelity.com, which I read the same day.
Two features drive most of the decision. If you want to borrow from your plan, the pages I read split on it: two say loans are not available and one says they are. If you want Roth employer contributions, only one of the pages I read says that is allowed.
The headline fee, on the other hand, is zero or close to it at all three, so cost alone is a poor way to choose.
Compare solo 401(k) and retirement account providers
Who Qualifies for a Solo 401(k)
The IRS describes a one-participant 401(k) as a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. It is not a special type of plan. It is a regular plan that happens to cover only the owner.
If you hire employees who meet the plan’s eligibility rules, they generally must be included, and the plan becomes subject to nondiscrimination testing unless it is exempt. You can read the details on the IRS one-participant 401(k) page.
The provider pages say the same thing in their own words. Fidelity states that if the company has common law employees, the plan is not appropriate, and E*TRADE says that if you hire employees you may need to freeze or terminate the plan. If you plan to hire soon, ask the provider what happens at that point before you open the account.
Your business needs real self-employment income to contribute, and the amount you can put in is tied to your earnings. If your store is not profitable yet, you may not be able to contribute much. That is a good reason to focus on the income first, which is what my guide to high-ticket dropshipping is about.
2026 Contribution Limits You Need to Know
Providers all use the same IRS limits, but some of their pages still show last year’s numbers, so go to the source. The IRS retirement topics page on 401(k) and profit-sharing plan contribution limits lists these 2026 figures.
| 2026 limit | Amount |
|---|---|
| Employee elective deferral | $24,500 |
| Total annual additions (employee plus employer), under age 50 | $72,000 |
| Catch-up contribution, age 50 and over | $8,000 (total up to $80,000) |
| Catch-up contribution, ages 60 to 63 | $11,250 (total up to $83,250) |
| Compensation limit used to calculate contributions | $360,000 |
The IRS also confirms the 2026 elective deferral limit of $24,500 and the $8,000 catch-up in its 2026 limits announcement.
The employer side works differently for a self-employed person. The IRS says employer nonelective contributions are up to 25% of compensation as defined by the plan, but self-employed owners must use a special computation based on net earnings from self-employment, after deducting one-half of self-employment tax and contributions for themselves.
The IRS points to Chapter 5 of Publication 560 for the rate tables and worksheets. This is the number that trips people up, so use the worksheet or have a CPA calculate it.
These limits are maximums and not goals. Contributing the full amount may not be possible for your earnings, and you also have to leave enough cash in the business to run it.
How to Evaluate Any Provider
Fees: Plan, Fund and Trading
There are three layers of cost. The first is the plan fee, meaning what the provider charges to open or maintain the plan. Schwab and Fidelity both say they charge nothing to open or maintain theirs, and E*TRADE’s page did not list one.
The second is the expense ratio of the funds you hold, which is the percentage of a fund’s assets used each year to pay operating costs. The third is trading commissions.
The second and third layers usually matter more than the first. A plan with no account fee that steers you into expensive funds can cost more than a plan with a small fee and access to low-cost index funds. I would look at the investment menu before the plan fee. Many owners simply hold a broad index fund, and I compare some in my guide to the best S&P 500 index funds.
Roth Features
A Roth solo 401(k) lets you make after-tax contributions, and Schwab’s page states that qualified Roth distributions are tax-free if you are over age 59 and a half and have held the account for over five years. The details differ by provider.
Fidelity says only employee salary deferrals can go into its Roth option and that employer contributions as Roth are not offered, while Schwab says Roth employer contributions are allowed. Neither Schwab nor Fidelity offers in-plan Roth conversions according to their pages.
If a Roth matters to you, check three things: whether the Roth option covers only your employee deferrals, whether employer contributions can be Roth, and whether you can convert pre-tax money inside the plan. Taxes here get complicated quickly, so check your plan with a CPA before you choose.
Loans and Withdrawals
Some solo 401(k) plans allow you to borrow from your own balance, and others do not. According to the pages I read, Schwab does not permit participant loans, Fidelity does not offer loans or hardship withdrawals, and E*TRADE says loans are available from both traditional and Roth accounts.
I would not plan a business around borrowing from retirement savings. For some owners the option is a safety valve, and it is easier to know about it in advance.
Early withdrawals have a cost. Schwab’s page notes that early withdrawals before age 59 and a half may incur a 10% penalty, and traditional distributions have 20% mandatory federal withholding. Treat the account as long-term money.
Investment Choices and Transfers
The provider’s investment menu matters because it limits what you can buy. E*TRADE says you can diversify with mutual funds, ETFs, stocks and more. Schwab’s page does not list its options in the section I read, and Fidelity’s page does not describe its lineup, so look at each provider’s fund list directly.
If you already have a solo 401(k) somewhere else and want to move it, ask about transfers. Fidelity says you can transfer a non-Fidelity self-employed 401(k) to Fidelity, including stocks, bonds and mutual funds, usually without selling them, though some funds may need to be sold and transferred as cash.
Paperwork and Contribution Mechanics
Opening the plan is usually an application plus an adoption agreement. Schwab’s page says you need an EIN, or a Social Security number if a sole proprietor is acceptable, and that you return the account application and adoption agreement.
If you do not have an EIN yet and you want one for your business, see my guide on business formation. A service like Bizee can handle the entity setup for you.
Contributions need to be labeled. Schwab’s page says its transmittal form is where you mark each contribution as an employee deferral or an employer contribution, and that if you do not specify, it defaults to an employee deferral. It also says salary deferrals can be made by direct deposit while employer contributions must be made by check, wire or journal.
The timing rules differ by business type. Schwab says unincorporated owners may make retroactive deferrals up to the tax filing deadline, excluding extensions, while incorporated owners must make deferrals in the same tax year. Ask your CPA which applies to you.
One more obligation to watch is annual reporting. The IRS says a one-participant plan generally must file Form 5500-EZ if it has $250,000 or more in assets at the end of the year, and plans with fewer assets may be exempt from the annual filing requirement.
Solo 401(k) or SEP IRA?
The other plan self-employed people commonly consider is a SEP IRA. I cover the differences in my guide to the best retirement accounts for business owners and I do not repeat the SEP limits here, because I did not verify them for this article. You can read the IRS overview of retirement plans for self-employed people to compare the rules.
The simple version of the trade-off is that a solo 401(k) lets you contribute as both employee and employer, which can let you put in more at lower income levels, and it usually offers a Roth option. A SEP is simpler to run. If you want to open an IRA as well, see my comparison of the best IRA accounts.
Mistakes That Hurt Solo 401(k) Owners
The first mistake is opening the plan and then hiring someone. Once you have eligible employees, the plan is a different animal, and you may need to freeze or terminate it.
The second is mixing up the employee and employer pieces, which have different limits and different tax treatment. The third is assuming your provider’s page has the right limits for the year. Some pages still showed 2025 numbers when I read them, so always check the IRS.
The fourth is ignoring the account after you open it. Opening it is only step one, and the plan does nothing until you fund it and invest the money. The fifth is putting money you will need soon into a retirement account and then facing taxes and penalties on early withdrawals. The sixth is forgetting the annual filing once your assets reach the threshold.
The seventh is picking a provider before checking whether it will work for your life. If you are a digital nomad, brokers may have rules about the countries where they accept customers. I did not verify any provider’s policy for non-U.S. residents, so ask before you start, and talk to a tax professional who works with U.S. expats.
Where the Money Comes From
A retirement plan only works if you can fund it. For most store owners that means keeping business and personal money apart, tracking profit properly and setting taxes aside. A business account like Mercury keeps things clean.
Bookkeeping software such as QuickBooks gives you the net income figure you need for contribution calculations. An ecommerce-focused tool like Finaloop is another option for tracking profit if your store has many orders and payment processors.
If you want to set up a brokerage account alongside the plan, see my guide to the best online brokerages. And for the building blocks you might hold inside the plan, read about the best investing apps for beginners.
See retirement and investing accounts you may qualify for
A Simple Action Plan
Step one is to confirm you have no employees and you expect to have none for a while. Step two is to shortlist two or three providers and read their current fee and plan documents, including the adoption agreement. Step three is to pick the one that has the features you actually need, such as Roth deferrals or loans, instead of the one with the best marketing.
Step four is to talk to your CPA about how much to contribute, how to split employee and employer contributions and which deadlines apply to you. Step five is to open the plan, fund it and invest in low-cost diversified funds.
If the income side is still the bottleneck, my high-ticket niches list is where I would start. After that, read the guide to finding suppliers.
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Frequently Asked Questions
Who can open a solo 401(k)?
The IRS describes it as a 401(k) plan covering a business owner with no employees, or that person and his or her spouse. You need self-employment income to contribute.
What are the 2026 solo 401(k) limits?
According to the IRS, the 2026 employee elective deferral limit is $24,500 and total annual additions are limited to $72,000 for those under 50, with an $8,000 catch-up at 50 and over and an $11,250 catch-up for ages 60 to 63. Check the IRS page because limits change each year.
Do I have to file a tax form for a solo 401(k)?
The IRS says a one-participant plan generally must file Form 5500-EZ if it has $250,000 or more in assets at the end of the year. Plans with fewer assets may be exempt from the annual filing requirement.
Can I take a loan from my solo 401(k)?
It depends on the provider. Among the pages I read, Schwab says participant loans are not permitted, Fidelity says loans are not offered and E*TRADE says loans are available. Confirm with the provider.
What if I hire an employee?
Eligible employees generally must be included in the plan, and it becomes subject to nondiscrimination testing unless exempt. Providers say you may need to freeze or terminate a solo plan, so ask your provider and your CPA before you hire.
Pick a provider based on the features you need, fund the plan consistently and revisit it once a year. If you are still earlier in the journey, start with the free high-ticket dropshipping guide.
More Guides in This Series
This is one of ten guides in my investing series for business owners and the self-employed, and these are the others you have not seen yet.
- Solo 401(k) vs SEP IRA: how the two self-employed retirement plans compare.
- Solo 401(k) Contribution Limits: the most you can contribute to a solo 401(k).
- SEP IRA Contribution Limits: how much you can put into a SEP IRA.
- How to Invest in Stocks: a beginner walkthrough of buying individual stocks.
- Best ETFs for Beginners: ETFs that make sense as a starting point.
- Best S&P 500 Index Funds: low-cost S&P 500 funds compared by cost and minimums.
- Best Dividend ETFs: dividend ETFs compared by cost, holdings and yield.
- How to Start Day Trading: how day trading works, including the rules, taxes and risks.
Related Articles
If you found this useful, these guides go deeper on related topics:
- How to Start Investing
- Best Retirement Accounts for Business Owners
- Best IRA Accounts
- Best Online Brokerage
- Best Investing Apps for Beginners
Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
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