You can make profit sharing, before-tax salary reduction, and after-tax Roth plan contributions to your Individual 401(k) account. Total contributions cannot exceed $69,000 per participant for 2024 (and up to $76,500 if age 50 or over). For 2023, the limits were $66,000 and $73,500, respectively.

In addition:

Unlike before-tax salary reduction contributions, Roth plan contributions are made with after-tax dollars, or money you've already paid taxes on. This means that your Roth contributions are included in the amount that you report to the IRS as taxable income. Like before-tax salary reduction contributions, Roth plan contributions are automatically deducted from your pay (or income for unincorporated individuals). When you make Roth plan contributions, however, the amount of your take-home pay will be less than when you make before-tax salary reduction contributions.

The good news is that your Roth plan contributions are tax-free when distributed and any earnings are not taxed when you take a qualified distribution²―generally in retirement. The bottom line: You can potentially maximize your spendable income in retirement, even if it means giving up before-tax advantages now. Roth plan contributions offer flexibility in retirement withdrawal strategies, including withdrawing the funds tax-free in retirement and the potential for more spendable income, as well as no RMDs.

To start an Individual 401(k) plan for your business at T. Rowe Price, you can download the necessary forms using the link below. For questions and assistance in completing the forms, or to discuss your options, call a T. Rowe Price Small Business Retirement Specialist at 1-800-492-7670. You can also request that an Individual 401(k) plan kit be sent to your home or business.

Start your Individual 401(k) plan

Self-employed individuals and small businesses with no eligible employees other than the owner (and spouse). This includes:

The plan is not appropriate for businesses that are planning to add
non-spouse employees in the near future.

The Individual 401(k) plan must be set up on or before the business tax filing deadline, including extensions. Employer/profit sharing contributions can be made up until your business's tax filing deadline, plus any extensions.

The deadline to make salary deferral contributions is the business tax filing deadline. However, if your business is incorporated, salary deferral contributions must be contributed as soon as the assets can be segregated from the employer’s assets, but no later than the 15th business day of the month following the month in which the deferral applies. For instance, amounts deferred from your salary in September must be deposited to your 401(k) account no later than the 15th business day of October.

If you open an account at T. Rowe Price, the Plan Sponsor website is a convenient way to make contributions via the Automated Clearing House (ACH).

Already enrolled? Contribute now.

Not enrolled yet? Enroll now.

Already enrolled in T. Rowe Price's Plan Sponsor website? Log in to T. Rowe Price's Plan Sponsor website to enter your contribution information, and then simply print the confirmation and mail it with your check.

Not enrolled yet? Print out an Employer-Sponsored Retirement Plan Contribution Form.

Generally, you can deduct up to 25% of compensation paid to all eligible employees. (This limit may be reduced if self-employed). You can contribute up to $23,000 in salary deferrals for the 2024 tax year if you're under age 50 ($30,500 if you're age 50 or older). These salary deferral contribution limits apply if you are making before-tax salary reduction contributions, Roth plan contributions, or both to your Individual 401(k) account.

Total contributions cannot exceed $69,000 per participant under age 50 in 2024 ($76,500 for participants age 50 and over).

Note: For 2023, the salary deferral limit was $22,500 if you were under age 50 ($30,000 if you were age 50 or older). The total contributions could not exceed $66,000 ($73,500 for participants age 50 and over) in 2023.

No. Each year, you decide if (and how much) to contribute to the plan. If you open your account at T. Rowe Price, once your contribution amount has been determined, you may submit a contribution via the Plan Sponsor website, or use the contribution form to mail the contribution.

T. Rowe Price charges no plan setup fees, loads, or sales commissions. An annual $20 account service fee is charged for each mutual fund account with a balance below $10,000. The $20 account service fee will be waived for the following circumstances: Subscribe to electronic delivery of statements and confirmations; maintain an individual combined balance of $50,000 or more for all T. Rowe Price accounts (including mutual funds, Brokerage, and Small Business Retirement Plans), and certain accounts enrolled in the T. Rowe Price Summit Program. Participants can subscribe to paperless delivery via the T. Rowe Price website once their account is established. If the participant account is closed during the year, a $20 closeout fee will be deducted automatically from the proceeds of the total redemption. However, the closeout fee is waived when an account service fee was previously assessed to the participant account for that year or when the proceeds are being used for a rollover, transfer, or conversion to a T. Rowe Price retirement plan account or T. Rowe Price IRA. Mutual funds are subject to management fees and expenses.

You are generally required to file IRS Form 5500 each year if the combined assets in all plans sponsored by the employer exceeds $250,000.

Please speak to your tax and legal advisor regarding questions that you may have regarding filing and other tax and legal requirements.

There are advantages to both types of contributions. But as the chart below shows, there are important differences. Deciding whether to make Roth plan contributions depends on your situation and should be based on several factors, including your age and tax rates now as well as in retirement.