There’s a powerful solo 401k loophole buried in the Secure Act of 2022—and almost nobody knows about it. Why? Because it’s based on two tax credits, and most solopreneurs or S corp owners get told the wrong thing.
Here’s the truth:
One of the credits doesn’t apply to solo 401k owners…
But the second one does—and it’s worth real money.
It’s called the auto-enrollment tax credit.
If you auto-enroll your “employees”… and in a solo 401k, you are the employee.
Check the auto-enroll box and you get:
• $500 tax credit per year
• For 3 years
• Total of $1,500 in credits
• Which is roughly equal to a $1,500 tax deduction
So let’s do the math:
• Setting up a solo 401k costs about $1,000
• You get a $1,000 deduction
• PLUS a $500 tax credit this year
• Meaning setting up your solo 401k literally pays you
You’re essentially getting paid $500 to start a retirement account that lets you save tens of thousands tax-free or tax deferred every year.
This is one of the easiest legal tax loopholes available for small business owners. If you’re setting up a solo 401k anyway, don’t leave this money on the table.
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