Consultants with side-hustle LLCs can shelter roughly 20% of net self-employment earnings in a Solo 401(k) profit-sharing slot, entirely separate from their workplace plan's limits. On $250,000 of consulting income, that profit-sharing slot adds up to $50,000 in pre-tax contributions, saving roughly $12,000 in federal taxes at the 24% bracket. Starting in 2026, high-W-2 earners may have workplace catch-up contributions forced into Roth, while Solo 401(k) profit-sharing dollars can still remain fully pre-tax.
Many financial professionals are salespeople paid on what they push, not whether you end up wealthier. A fiduciary is the opposite. The SEC legally requires them to put your interests first.
Advisor.com's free matching tool pairs you with vetted fiduciaries from major national firms, all in under three minutes. See who you match with today. A 58-year-old strategy consultant left a corporate VP role two years ago.
The day job still pays a W-2 of about $220,000, where she maxes the workplace 401(k). On the side, an LLC bills clients roughly $250,000 a year for project work. Her question, posted on a financial-independence forum this spring: with the workplace plan already capped, is there any way to shelter more of the consulting income from a 24% federal bracket?
The answer is the Solo 401(k), and the mechanics most W-2 employees never learn are the reason it works. The IRS lets a Solo 401(k) participant under 50 contribute up to $72,000 in 2026 between employee and employer pieces. Employees age 50 and up add an $8,000 catch-up.
Those age 60 through 63 get the SECURE 2.0 super catch-up of $11,250 instead. Here is what most consultants miss. The employee deferral piece, $24,500 in 2026, is a single bucket that applies across every 401(k) you participate in.
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