Solo 401(k) for Financial Advisors

Learn why so many financial advisors choose a self-directed solo 401(k) plan to save for retirement.

  • Invest in a wide range of investment options through a self directed brokerage account at any financial institution of your choice
  • Reduce your taxable income with traditional or Roth options
  • Get access to funds through a loan option
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In 2022, the average age of a financial advisor was 57, according to J.D. Power’s 2022 U.S. Financial Advisor Satisfaction Study. Industry analysts have estimated that 111,500 advisors (one-third of the industry) will retire over the next decade.

You have spent your whole career helping clients build their personal wealth to retire from the workforce gracefully. But you may have put your own financial planning on the back burner.

Part of your succession planning may include starting a Solo 401(k) and making catchup contributions to increase your retirement nest egg. In as little as 15 minutes, Ubiquity can get you set up with a Solo 401(k) for financial advisors that offers high contribution limits and a full menu of investment choices.

Which Financial Advisors Are Eligible for a Solo 401(k)?

A Solo 401(k) is a retirement savings account for self-employed business owners with no full-time regular employees. As a financial consultant, you may work as a 1099 freelance professional, you may own your own business entity, or you may be employed for a brokerage that doesn’t sponsor its own retirement plan.

In any of these circumstances, you’re the perfect candidate for a Solo 401(k). You may even have other freelancers, 1099 workers, or part-time employees working for you and still open a Solo 401(k) plan. Your spouse may work for you and contribute to the plan, effectively doubling your household’s savings.

What Are the Benefits of a Financial Advisor Solo 401(k)?

When financial advisors open a Solo 401(k), they start saving for the future by generating gains and compounding interest over time. Further, financial advisors working at incorporated businesses can deduct self-employed contributions from their personal income taxes. Financial advisors who are not incorporated can count their contributions as a business expense.

A Solo 401(k) is easier to administrate than a traditional 401(k) with multiple employees since you don’t have to undergo annual plan auditing or pass nondiscrimination testing. Additionally, you don’t have to file the annual Form 5500-EZ until the plan reaches $250,000.

When Can Solo 401(k) Money Be Withdrawn?

As early as age 59.5, you’ll be able to start taking money out of your 401(k) fund to live off, paying taxes then as if it were regular income. You may be in a lower tax bracket when you retire, which means you’ll pay lower taxes in the future on the money you earn at present. Taking money out early can result in a 10% penalty. You aren’t required to take monthly distributions until you turn 72. If you wish to leave your distributions to your heirs, you can roll the money over into an IRA.

What Are Roth Solo 401(k)s?

A traditional Solo 401(k) reduces your taxable income. You do not pay taxes on the amount put into the account until you take that money back out of the account as a distribution. If you anticipate being in a higher tax bracket once you retire, you may opt to make your Solo 401(k) a Roth account, which means you pay the employee portion of your taxes upfront, so there is no tax on the distribution. The employer amount contributed is still taxed in retirement, but the money you put in (and its growth) is all yours.

How Much Can Financial Advisors Contribute to a Solo 401(k)?

The upper limits for a Solo 401(k) are the same as a traditional 401(k), but a Solo plan gives you the unique opportunity to save as both employee and employer. Like a traditional 401(k), you’ll be able to save up to 100% of your income to a maximum of $22,500 as an employee of the plan. If your business entity is a sole proprietorship or partnership, you may contribute up to 25% of your compensation as the employer of the plan. Your total combined employer/employee contributions cannot top $66,000 for advisors age 50 and older in 2023. Participants who are age 50 or older can save an additional $7,500 in catch-up contributions.

If both you and your spouse take taxable income from the same business, you can both contribute to one solo 401(k) plan–doubling the savings potential!


When Can Financial Advisors Open a Solo 401(k)?

You must establish your Solo 401(k) plan by December 31, 2022, in order to make a contribution for this year. You have until April 15, 2023, to make your employee and employer contributions for 2022. It is possible to file for tax deadline extensions to ensure you maximize the amount of savings for the year.

How Can Financial Advisors Find a Solo 401(k) Provider?

In shopping around for a Solo 401(k) provider, financial advisors will want to inquire:

  • Are both Roth and traditional contributions allowed?
  • Are loans available from the plan?
  • What investment options are allowed?
  • Are rollovers allowed into or out of the plan?
  • What are the costs to maintain the plan?
  • Are there assets under management (AUM) fees?

Find the Best Solo 401(k)s for Financial Advisors

When you partner with Ubiquity as your third-party Solo 401(k) administrator, your plan includes total checkbook control, the option to invest in alternate assets, your choice in brokerage, and a-la-carte services.

Ubiquity is one of the most popular third-party providers in America, offering plan setup and management for a low monthly rate with no additional fees for Assets Under Management. Since 1999, we have helped many financial advisors save for their retirement with the top Solo 401(k) plans customized to meet their needs. Contact us to get started in as little as 15 minutes.

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44 Montgomery Street, Suite 300
San Francisco, CA 94104

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© 2023 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 300
San Francisco, CA 94104