How does a Solo 401K work?

The Solo 401(k) retirement plan allows for salary deferrals found in 401(k) plans, and employer contributions found in profit-sharing plans. You can make annual contributions of both salary deferral and profit-sharing contributions, empowering you to save up to $56,000 in 2019  or $62,000  if you are more than 50 years old, tax-deferred. The Solo 401k annual contribution limit increased by $1,000 for tax year 2020 to $57,000 and $63,500 for those 50 or older.