Owner Only / One-Person 401(k) Plans

Operators of owner-only businesses – those that either have no additional employees or in which all employees can be lawfully excluded from a qualified retirement plan – may find the owner-only 401(k) plan to be an attractive arrangement.

Owner-Only Plan Elibility

Employee eligibility requirements are the same as those for 401(k) profit-sharing plans. A recent tax law permits owners, partners and shareholders of small businesses, along with their spouses, to maximize their contributions if net compensation per individual is less than the current indexed dollar limit.


Contribution types and limits are the same as those for 401(k) profit-sharing plans, including elective salary deferrals, profit-sharing contributions based on the percentage of annual compensation and total contributions up to a designated limit.

Employees age 50 and older can also make a catch-up contribution, which does not count against the contribution limit.

Advantages of a Owner Only 401(k)

In addition to the advantages offered by a 401(k) profit-sharing plan, the Safe Harbor 401(k) avoids the nondiscrimination testing that may limit the amounts highly compensated employees may defer.