For those of you who are working as independent contractors or small business owners, you may benefit from contributing to a small business retirement plan. One plan that allows for the largest pre-tax contribution is the Solo 401(k).

Tax planning for your business may be the difference between turning a nice profit and barely keeping the doors open. Similarly, making smart tax moves may free up more money to save for a secure retirement. Using a Solo 401(k) may allow you to invest more for your future and get some nice tax deductions along the way.

Solo 401(k) Contribution Limits for 2020 With a Solo 401(k), small business owners can contribute as both the employee and the employer. That could lead to some pretty nice tax savings for those who contribute the maximum contribution limit to the plans.

As the employee, you can contribute up to $19,500 for 2020. Total contribution limits as both the employee and employer have increased by $1,000 to $57,000 for 2020.

That number does not include the potential $6,500 catch-up contribution, available to those who are at 50 years old, or older, during 2020. All in, that means small business owners, who are at least 50 years old, have the option to contribute the maximum contribution limit of $63,500 for a Solo 401(k) plan.

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