Solo 401(k), including for real estate in retirement
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A solo 401(k) is a retirement plan for a business with no employees other than the owners and their spouses. Because you contribute both as the employee and as the employer, it allows far more to go in each year than an IRA.
It's also one of the few retirement accounts that can buy real estate with a loan without owing the tax an IRA would on the borrowed part, which makes it popular with owners who invest in property.
How it works
A business with no employees other than the owners and their spouses can have a solo 401(k), with high limits. It can also hold real estate bought with a loan without the tax an IRA would owe on the borrowed part.
What makes it hold up
- The plan documents and a separate account
- Contributions split between employee and employer shares
- Form 5500-EZ once the plan holds more than $250,000
Risks
Low for the account itself. Dealing with the plan’s property personally (living in it, lending to yourself) is a prohibited transaction and can disqualify the plan.
Questions to ask your CPA
- Does my business qualify for a solo 401(k)?
- Should my self-directed IRA move into it?
Common questions
Who qualifies?
A business whose only workers are the owners and their spouses. Once you hire an employee who meets the plan's rules, you'll need a plan that covers them.
How much can I contribute?
As the employee, up to $24,500 of your pay in 2026, plus catch-up amounts if you're 50 or older. The business can add an employer contribution on top, based on your pay or self-employment income, up to the IRS's overall yearly cap.
Can my spouse join?
Yes, if your spouse works in the business and is paid, which can roughly double what your household puts away.
What paperwork does it need?
Plan documents and a separate account. Once the plan holds more than $250,000, file Form 5500-EZ each year.
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Education, not advice. Tax law changes and every situation is different, so confirm the details with your CPA or tax advisor before acting. This page was last checked against tax law as of October 2026, including the 2025 tax law, in October 2026.