Solo 401kA solo 401k is just another name for an individual 401k. These special 401k plans were created by EGTRA in 2001 to benefit the small business owners who may only have a single participant for the plan – the entrepreneur themselves.

A solo 401k or individual 401k is for a self-employed business owner plus his/her spouse. If you have any other full time employees on your payroll, you do not qualify for a solo 401k plan.

The contributions to the plan are immediately 100% vested. The contribution limits for 2009 are $16,500 with an additional catch-up contribtuion of $5,500 if you are over the age of 50. Loans are allowed.

If you are a sole proprietor and are trying to determine which retirement plan works best for you – ask your financial planner about an individual 401k.