Some self-employed savers can put away as much as $62,000 for retirement in a solo 401(k) in 2019, depending on age and compensation. Getty Images By Thomas H. Blanton, Reporter and Michael DeSenne, Executive Editor June 18, 2019 A solo 401(k), also known as an individual 401(k) or a one-participant 401(k), is designed for self-employed people who have no employees other than a spouse. The plan allows these small-business owners to salt away much more for retirement than they could stash in a traditional IRA or even a SEP IRA -- another generous retirement plan designed for the self-employed -- while avoiding the expense and paperwork of setting up a full traditional 401(k) plan.Solo 401(k) Contribution Limits for 2019 The maximum amount a self-employed individual can contribute to a solo 401(k) for 2019 is $56,000 if he or she is younger than age 50. Individuals 50 and older can add an extra $6,000 per year in "catch-up" contributions, bringing the total to $62,000. (Amounts are higher for 2020.) Whether you're permitted to contribute the maximum, though, will be determined by your self-employment income. SEE ALSO: 50 Great U.S. Cities for Early Retirement You are allowed to sock away so much because you can make contributions as both an employee and an employer, though each type of contribution to a solo 401(k) has its own IRS rules. For instance, you can contribute up to $19,000 for 2019 as an employee (or $25,000 if you're 50 or older), even if that is 100% of your self-employed earnings for the year. Contributions are made on a pre-tax basis, although some solo 401(k) providers also offer a Roth 401(k) option that allows you to invest some or all of your contributions on an after-tax basis. Pre-tax contributions and their earnings will be taxed as regular income when withdrawn in retirement; Roth contributions will be tax-free in retirement. Advertisement In addition, you effectively can contribute up to 20% of your net self-employment income as an employer (your business income minus half your self-employment tax), though those contributions must be made with pre-tax dollars. These pre-tax contributions lower your taxable income and help cut your tax bill. To set up a solo 401(k), you just complete an application to open one with a financial institution, says Todd Youngdahl, a certified financial planner in Falls Church, Va. Most large investment firms have such accounts available for business owners, he says. Youngdahl recommends Fidelity because it does not charge a fee to open a solo 401(k), nor does it charge annual plan fees. You can invest the money in mutual funds, certificates of deposit or other investments offered by the plan provider. Employee contributions generally must be made by the end of the calendar year, but you have until the tax-filing deadline to make employer contributions. A solo 401(k) can help you build a sizable nest egg. Say a 30-year-old contributes $10,000 a year to a solo 401(k) and has an annual return of 6%. By age 65, he or she will have contributed $350,000, but the nest egg will have grown to nearly $1.2 million. Advertisement Though a solo 401(k) takes little paperwork to set up, you should be aware that once your plan exceeds $250,000 in assets, you must file Form 5500 with the IRS every year, according to Jim Shagawat, a certified financial planner in Paramus, N.J. Who Should Invest in a Solo 401(k)? Mark Beaver, a certified financial planner in Dublin, Ohio, says a solo 401(k) can be a very good option for someone who has self-employment income and is trying to maximize their pre-tax retirement savings. It's also a good savings option for someone who works for a company that has a 401(k) plan but who also does contract work on the side, says Scott Frank, a certified financial planner in Encinitas, Calif. SEE ALSO: 9 States with No Income Tax Just keep in mind that 401(k) contribution limits apply per person, not per plan. If your solo 401(k) is for a side job, and you're also participating in a 401(k) at your day job, the contribution limits apply across all plans, not each individual plan.