small business retirement

Individual 401(k)

What is an Individual 401(k)?

An Individual 401(k)—also known as an i401(k)—is a retirement plan that can maximize your savings if you're self-employed or if you're a partner in a business whose only employees are the partners and their spouses.

Who can use the plan?

Self-employed individuals and business owners with no common-law employees and their spouses who are employed by the business. 

The business owner can contribute both as an employer and employee. 

C corporations, S corporations, and limited liability companies (LLCs), with no common-law employees, can also participate.

Employer contribution limits

  • Employers can contribute up to 25% of compensation* not to exceed $66,000 for the 2023 tax year and $69,000 for the 2024 tax year.
  • Contributions are generally deductible as a business expense and aren't required every year. When contributions are made, however, all participants must receive the same percentage.
  • SECURE 2.0 allows the option for 401(k) plans to have Roth employer contributions. At this time, Vanguard will not be offering the Roth Employer option in our Individual 401(k).

Employee contribution limits

  • Employees can defer 100% of their compensation* up to $22,500 for the 2023 tax year ($30,000 for employees age 50 or older) and $23,000 for the 2024 tax year ($30,500 for employees age 50 or older).
  • Employees can make pre-tax or Roth (after-tax) contributions. 
  • Rollovers of pre-tax assets are permitted.

Total contributions

As a business owner, you can contribute both as an employer and employee.* The combined amount of employer plus employee contributions can't exceed $66,000 for the 2023 tax year ($73,500 if age 50 or older) and $69,000 for the 2024 tax year ($76,500 if age 50 or older).

Investment choices

Participants can choose from more than 100 Vanguard mutual funds, including many from our lower-cost Admiral™ share class. And there's no minimum initial investment.

Browse Vanguard's fund choices

What are Admiral Shares?

See what Vanguard assets qualify

 

Eligibility is first calculated using qualifying assets for an individual client. We then combine the qualifying assets of clients sharing a residential address to determine final eligibility*.

Assets that qualify

 

  • Any assets under management of Vanguard Personal Advisor Services.
  • Vanguard mutual funds and Vanguard ETFs held by a client in certain personal accounts qualify. Personal account types include: individual non-retirement, education savings accounts, IRAs, Joint, Trust, Custodian, Guardian, UTMA, UGMA, Estate, Sole Proprietorship, and Single-Participant SEP IRA plans.

Note: Vanguard assets in a Vanguard 529 Plan, Vanguard Variable Annuity, Multi-participant SEP IRA plans, SIMPLE, i401k, 403(b), family partnership, family corporation, or employer-sponsored retirement plans for which Vanguard provides recordkeeping services may be included in determining eligibility if you also have a personal account holding Vanguard mutual funds or Vanguard ETFs. Assets held in other account types are not eligible to be included in service eligibility determination.

We review qualifications periodically

The qualification criteria (for example, asset levels) are reviewed periodically and could change at any time. Vanguard reserves the right to discontinue enrollment in any of these services or reassign any investor, without prior notification, to the appropriate service level if the investor fails to continue to meet the applicable qualification criteria. Vanguard reserves the right to amend or cancel selected features and benefits at any time without prior notification.

In addition, ongoing access by any particular investor to individual services, discounts, and exemptions is subject to periodic review and may be restricted based upon criteria established solely by Vanguard. While these services are complimentary, some underlying services may charge fees and expenses. Vanguard does not guarantee any level of service.

* Business addresses and other non-residential addresses are not eligible to be aggregated for purposes of determining services.
  • There’s no fee to establish an account.
  • We charge $20 a year for each fund held in a Vanguard Individual 401(k) account. We'll waive the fee for all participants in the plan if at least one participant has at least $50,000 in qualifying Vanguard assets.

See what Vanguard assets qualify

  • An employer identification number (EIN) is required to establish an Individual 401(k) plan. You can’t use your Social Security number. If you don't have an EIN, apply for one online at IRS.gov.
  • For one-participant plans, annual filing of IRS Form 5500 is required once the plan's assets reach $250,000 at the end of your plan year or you terminate your plan. We'll provide you with information each year to help you complete the form.
  • Plan administration may require occasional duties, such as periodically updating or restating the plan, which we can help you with.

  • You can't take withdrawals until a specified event, such as reaching age 59½, terminating the plan, separating from service, or experiencing another event as identified by the plan.
  • You may be allowed to take a hardship withdrawal, which may be subject to a 10% penalty if you're under age 59½.
  • You can’t take a loan from your Vanguard Individual 401(k).
  • You'll pay ordinary income tax on any taxable distributions.
  • Roth distributions are tax- and penalty-free if taken after age 59½ and you've had the Roth Individual 401(k)for more than 5 years.

Ready to get started?

If you're new to Vanguard, give us a call.

800-992-7188

Are you a Vanguard client looking for a small-business plan? Set up your new plan today.

Get started

Ready to get started?

If you're new to Vanguard, give us a call.

800-992-7188

Are you a Vanguard client looking for a small-business plan? Set up your new plan today.

Get started

Learn more about small-business retirement

Enhance your retirement plan

Looking to enrich your existing retirement plan with quality mutual funds? Our investment-only service opens the door for you to offer Vanguard funds. 

Learn about our investment-only option

Move your plan to Vanguard

Consider moving the small-business plan you hold elsewhere to Vanguard. You can enjoy high-quality, low-cost funds and reliable service for your portfolio.

Learn how to transfer your plan

*Self-employed individuals must calculate their maximum contribution using the rate table or worksheets in Chapter 5 of IRS Publication 560, Retirement Plans for Small Business, or see  a tax advisor.

All investing is subject to risk, including the possible loss of the money you invest.