A Self-Employed 401(k) plan is a profit-sharing plan with a salary deferral arrangement, qualified under Internal Revenue Code 401.

The Roth Self-employed 401(k) is an account within your Self-employed 401(k) plan in which you must make any designated Roth deferral contributions. A separate account is needed for accurate tracking and tax reporting purposes. 

A self-employed 401(k) plan may be appropriate for sole-proprietors and other small businesses who have no eligible employees other than owners and spouses of the owners. Individuals with corporations (Corp.), limited liability corporations (LLC), and partnerships may also be able to establish a self-employed 401(k), provided there are no common law employees of the business.

In addition to the business owners, the owners' spouses may participate in the plan provided they are compensated employees of the business.

If the company has common law employees this plan is not appropriate. This plan might not be appropriate if you have ownership interest in more than one business or are a participant in a company sponsored 401(k) or other salary deferral retirement plan. If you are looking for a plan with loans, or hardship withdrawals, this would not be an appropriate plan for your business as these features are not offered at this time.

The plan administrator, who is typically the business owner, would be responsible for the administration of the plan, and is required to maintain and update, when needed, all plan records and documents pertaining to the plan. Making and tracking contributions to and approving distributions from the plan are also the plan administrator's responsibility. In addition, the plan administrator is responsible for the tax filing that is required for some plans annually and all plans upon termination. Please see Maintain your 401(k) for more information.

The deadline to open a new plan is generally the tax filing deadline (including extensions) of the sponsoring business.

Note: For partnerships and corporations that establish their plan after the business's year end, only the employer profit sharing contributions are allowed for the first year. Sole proprietors who establish their plan after the business's year end and before their tax filing deadline (no extension) must make their deferral contribution by their tax filing deadline (no extension). Sole proprietors who establish their plan after their tax filing deadline but before their extension deadline may only make profit sharing contributions for the plan's establishment year.

A spouse, who is also a compensated employee of the business, may be added to the plan by using the Self-Employed 401(k) account application.

The deadline for self-employed individuals and owner-only businesses to make both the company profit sharing and employee salary deferral is the business's tax filing deadline, including extensions.

For corporations and partnerships, in the year the plan is established, if it is established after the business's year end, only profit sharing contributions are allowed. In subsequent years, both company profit sharing and employee salary deferrals are permitted.

Sole proprietors must open their plan by their tax filing deadline (no extension) to make both profit sharing and salary deferral contributions in the first year.

For the year that salary deferrals are to commence, generally participants (including self-employed individuals and spouses of owners (if they are also participating employees) must make a written salary deferral election by the business's year end.

If you have an unincorporated business, you (and your spouse if they are an employee of the business) must make a written salary deferral election before the end of the year. Employees of incorporated businesses must make a written salary deferral election before they can begin deferring from paychecks and that must be before the end of the business’s tax year.

You may use the sample 401(k) Salary Reduction Agreement Form (PDF). Fill it out and have each participating owner (including the business owner's spouse, if applicable) complete a Salary Reduction Agreement Form if they will be making salary deferral contributions to the plan.

Please keep this form for your own records. There is no need to send a copy to Fidelity.

• Individuals may elect a salary deferral amount up to $23,500 for 2025 and $23,000 for 2024.
• Employers may contribute a profit-sharing amount up to 25% of compensation, with the maximum allowed combined employer and salary deferral contribution amount of $70,000 for 2025 and $69,000 for 2024.
• For participants age 50-59 or 64+, additional salary deferral catch-up contributions are allowed of $7,500 for 2025 and 2024. For participants age 60-63 the catch-up contribution remains $7,500 for 2024 but is raised to $11,250 for 2025.

The Roth Self-employed 401(k) is a separate account within your Self-employed 401(k) plan, in which you can make your employee Roth deferral contributions.

Some participants will need to make their catch-up contributions as Roth starting in 2026. It's voluntary for everyone else. Beginning January 1, 2026, section 603 of the SECURE 2.0 ACT of 2022 requires that eligible participants in a 401(k) plan whose wages for the preceding calendar year exceeded $145,000, must make any catch-up contributions as designated Roth deferrals.

Qualified contributions are tax free—that includes the earnings. You do not, however, receive a tax deduction when you make the contribution. See your tax advisor if you have questions on whether tax free distributions are best for you.

If you are ready to establish your Roth Self-employed 401(k) you'll need an account setup and you'll need to fill out the Roth Self-employed 401(k) Addendum (PDF).

You can select from a wide range of investment options. These include Fidelity and non-Fidelity mutual funds along with stocks, bonds, ETFs, and CDs.

• The deadline to open a new plan is generally the tax filing deadline (including extensions) of the sponsoring business.
Note: For partnerships and corporations that establish their plan after the business's year end, only the employer profit sharing contributions are allowed for the first year. Sole proprietors who establish their plan after the business's year end and before their tax filing deadline (no extension) must make their deferral contribution by their tax filing deadline (no extension). Sole proprietors who establish their plan after their tax filing deadline but before their extension deadline may only make profit sharing contributions for the plan's establishment year.
• The employer will establish the plan and name the plan administrator. Typically with the self-employed 401(k), the employer and the plan administrator are the same person, but you may name someone else as plan administrator if you choose.

Note: The plan administrator is responsible for making contributions, authorizing withdrawals, preparing and filing the 5500 when necessary, and recording and keeping documents for the plan and updating those documents when necessary.

Eligible participants who wish to defer salary must complete a salary reduction agreement form before the plan's year end. You may use the Salary Reduction Agreement form (PDF) and keep it in your own records. If you have elected to make designated Roth deferral contributions into your plan, be aware that there is one overall annual limit, and that is aggregated between your Traditional self-employed 401k and your Roth self-employed 401K deferral.

• Note: For corporations and partnerships, in the year the plan is established, if it is established after the business's year end, only profit-sharing contributions are allowed. In subsequent years, both company profit sharing and employee salary deferrals are permitted. Sole proprietors must open their plan by their tax filing deadline (no extension) to make both profit sharing and salary deferral contributions in the first year. Sole proprietors must open their plan by their tax filing deadline (no extension) to make both profit sharing and salary deferral contributions. In the first-year deferral contributions must be made by the tax filing deadline (no extension). Sole proprietors who establish their plan after the tax filing deadline but prior to the extension deadline may only make employer profit sharing contributions the first year of their plan.
• As a plan sponsor, you can make contributions online via EFT from your bank or from an individual account on Fidelity.comLog In Required. Mobile check deposit is available using the Fidelity's mobile app.
• For assistance calculating your contribution amount please use the Small Business Retirement Plan Contribution Calculator.
• The employee salary deferral contribution has one overall annual limit, and that is aggregated between your Traditional self-employed 401k and your Roth self-employed 401K deferral.

• Participants are eligible for a withdrawal once a triggering event occurs, such as turning age 59½, disability, or death. 10% early withdrawal penalty applies if you take a distribution before you're 59½ years old. Required minimum distributions (RMDs) start at age 73.
• There is a 20% mandatory federal withholding requirement for any withdrawal that is otherwise eligible to roll over to another plan.
• Withdrawals are done in writing using the Defined Contribution Retirement Plan One-Time Withdrawal form (PDF).
• Qualified Distributions from your designated Roth account are tax free. Unqualified distributions are done proportionally between your contributions and earnings, earnings are subject to taxes and possible penalties. To be qualified your designated Roth account must have met it's 5-year aging requirement and your distribution must be made at age 59½ years of age or older, due to disability, or from an inherited account.

• The Defined Contributions Retirement Plan document (PDF) contains the IRS-approved rules for your plan, as well as a definition of terms.
• Important Information regarding your Defined Contribution Retirement Plan:
  Participation in a 401(k) arrangement has changed with the passing of the SECURE Act and the SECURE Act 2.0. Beginning in 2021 the strictest age and service requirements that can be applied to an employee before the employee can participate in a 401(k) arrangement are: 1) at least 21 years old and the date completing 1 year (12 months) and no less than 1,000 hours of service or 2) completing 3 consecutive years (36 months) of service with at least 500 hours of service or more each year provided the employee has attained age 21 by the close of the third year. The later could make 401(k) deferrals under the plan available to certain part-time employees starting 1/1/2024. Beginning in 2023, the SECURE Act 2.0 reduces the 3 year rule to 2 years. This could affect employees starting 1/1/2025.
• Note: In accordance with IRS Notice 2024-73, employees' ability to defer into the plan is delayed until 1/1/26.

Starting with the forms you fill out to establish your plan, you'll want to keep a file of all relevant documents. This is not a comprehensive list, but among the important documents you will need are the plan document, the adoption agreement, records of all contributions and distributions, and any corrections of errors of operation, should they occur. Over the life of your self-employed 401(k), you may have reason to amend your adoption agreement. You should keep any older versions, along with the most current version. You may operate under different versions of the plan document, and you should keep a copy of all versions. Note: Fidelity doesn't retain any of these records on your behalf.

• To ensure accurate tax reporting in the Roth Self-employed 401(k) it's important to keep track of the year of first contribution, and all contributions, for accurate tax reporting. If the designated Roth Self-employed 401(k) began at Fidelity, we will track this information. If the plan was transferred to us, the plan administrator will need to update any contributions made outside FidelityLog In Required and if the year of first contribution needs to be updated, it can be done using the Retirement Plan Information Form (PDF).
• If you maintain part of your plan outside Fidelity or completed an in-plan Roth rollover (IRR)/conversion if your plan, the plan administrator will be responsible for providing upon any distribution request: the tax able amount, any IRRs done within the last 5 years, and the amount of the distribution that is attributed to principle in your Roth Self-employed 401(k) account.

• Any change in your plan that would alter information on your adoption agreement requires you to fill out a new adoption agreement, amending your plan. Substantial changes could result in a termination of the plan. If you are unsure whether you should amend or terminate your plan, please see your tax advisor.
• The plan document itself is updated for legislative changes every 6 years. Once Fidelity makes the changes to the plan document and they are approved by the IRS, you'll need to restate your plan. That will require an amended adoption agreement and a new plan document.
• For your Roth Self-employed 401(k) update any contributions made outside FidelityLog In Required and your year of first contribution using this form Retirement Plan Information Form (PDF).

• Most owner-only plans can file the 5500EZ after plan assets exceed $250,000 but consult the IRS or your tax advisor if you are unsure of which version of the form applies to you.
• See Understanding form 5500 for more information and help with the filing.

• If an error is made operating your plan, it's your responsibility as the employer to make necessary corrections. See "helpful resources" below for more information
• A common error of operation is over-contributing to the plan, resulting in an excess contribution. You should do everything you can to avoid over contributing, as it can be costly and difficult to correct an excess contribution. There are multiple types of excess, but the two most common are:
  
  1. The profit-sharing excess which cannot be removed from the plan. The IRS remedy is to "carry forward" the excess and apply it to a future year. Penalties may apply.
  2. An excess salary deferral, which must be removed by 4/15 after the year the excess was deferred.
• If you believe you have contributed more than you should, please consult your tax advisor. If you have questions, our retirement representatives may be able to help. Please call 1-800-544-5373 and say "Small Business Retirement plan." Please be aware, our representatives are not tax advisors.

• An active plan should have substantial and recurring contributions. If you are ready to terminate your plan please see the Self-employed 401(k) Termination Guide (PDF).
• If instead if a self-employed 401(k) you have a money purchase and/or a profit sharing plan please use one of the following guides:
  • Money Purchase Termination Guide (PDF)
  • Profit Sharing Termination Guide (PDF)

Your self-employed 401(k) should not be subject to Title 1 of ERISA because it does not cover employees beyond the owners of the business sponsoring the plan (or their spouses). However, you if operate a money purchase or profit sharing plan with common law employees you should be aware of the to keep up to date on fee disclosure regulations for plan sponsors and plan participants.

As a plan administrator, you will need to keep track of contributions made to your Roth SE 401(k) at a previous provider if you transfer the plan to a Roth Self-employed 401(k) at Fidelity. Keep track of Roth contributions made in a plan that was transferred to FidelityLog In Required

Some plan participants will be required to make their catch-up contributions as Roth starting in 2026. Roth deferral contributions are voluntary for everyone else. Beginning January 1. 2026, section 603 of the SECURE 2.0 ACT of 2022 requires that eligible participants in a 401(k) plan whose wages for the preceding calendar year exceeded $145,000, must make any catch-up contributions as designated Roth deferrals. Find out more about making contributions.

Making Roth deferral contributions in your Self-employed 401(k) plan will require having a separate account in order to track the principal and earnings amount as well as the year of the first Roth contribution - important elements for proper tax reporting. Please note this is not a separate PLAN. It’s part of your Self-employed 401(k) plan, so you won’t need a new adoption agreement if you already have a plan in place, but you will need a new account solely for the Roth contributions and  you must complete the Roth addendum, found in the documents with the application. Open A Roth Self-employed 401(k)

Qualified distributions from your Roth Self-employed 401(k) account are tax free. To be a qualified distribution:

• You have met the 5-year aging for your Roth Self-employed 401(k) account. The aging begins Jan 1 of the year you first contributed to or converted to your Roth Self-employed 401(k). (Please note, Fidelity does not allow conversions in our plan.)

AND

• Your distribution must be taken when you are age 59½ or older, because you are disabled as defined by the IRS, or from an account you have inherited because the original owner has passed away.
• The Distribution form (PDF) must be completed and returned to Fidelity to take a distribution.

Note: Distributions that are non-qualified may have taxes on the earnings and possible IRS penalties.

The Plan administrator is responsible for additional recording keeping:

• Tracking each participant's year of first contribution
• Tracking each participant's Roth elective deferrals
• Providing information to the participants when they leave the plan, including principal amount, year of first contribution, and any in plan Roth rollovers(IRRs).
• Proving information upon any distribution request about: the participant's contributions, IRRs,  and taxable amounts of any distributions, for plans that are spread out among companies or plans in which IRRs were completed.
• Fidelity Investments assists you in tracking the year of first contribution and principal amount in your account however, for plans begun elsewhere the plan administrator must provide that information to Fidelity Investments so that we can accurately report tax information.
  • Designated Roth contributions made outside of Fidelity and transferred to your Roth Self-employed 401(k) account at Fidelity may be manually disclosed by the Plan administrator. Keep track of Roth contributions made in a plan that was transferred to Fidelity.Log In Required.
  • Year of first contribution may be updated using this form Retirement Plan Information Form (PDF).

Participants are eligible for withdrawals once a triggering event has been reached. Triggering events include reaching age 59½, disability, and more. For a full list of triggering events see the One-Time Withdrawal — Defined Contribution Retirement Plan form (PDF).

If you are under age 59½ and are taking a distribution, a 10% early withdrawal penalty from the IRS will apply. A 20% mandatory withholding would also apply to any distribution that is an eligible rollover distribution. Required Minimum Distributions (RMDs) must begin at age 73.

Qualified withdrawals can be made from a Roth Self-employed 401(k) tax-free if you are 59½ and have held the account for over 5 years. Withdrawals prior to 59½ or without meeting the holding period may result in taxes and penalties

To process a withdrawal from a Self-employed 401(k) plan, please use the One-Time Withdrawal - Defined Contribution Retirement Plan (PDF) form. The plan administrator and the participant for the Self-employed 401(k) plan will both be required to review and authorize the distribution from the plan.