Can I avoid Social Security earnings limit by contributing to solo 401k? Early retirement question

Yes, you can absolutely reduce your countable income for the Social Security earnings test by making contributions to a solo 401(k)! This is because SSA looks at your gross earnings AFTER business deductions, which includes your contributions to qualified retirement plans. The earnings test looks at your net earnings from self-employment, not your gross revenue. So contributions to a solo 401(k) would reduce the income that counts toward that $23,080 limit for 2025. This is one of the best strategies for self-employed early retirees to maximize both their income and SS benefits before reaching full retirement age. Just make sure you properly set up the solo 401(k) and follow contribution limits.

my brother tried this last year with his plumbing business and it WORKED!!! made like 45k but only counted like 22k after all the stuff he put in retirement and some business expenses. SS never reduced his checks at all. good luck!!!

Be very careful here. While retirement plan contributions can reduce your countable income for the earnings test, it's more complicated with self-employment. The Social Security Administration looks at your net earnings from self-employment, which is calculated differently than taxable income. For self-employment, they take your net profit (after business expenses) and multiply by 0.9235 to determine countable earnings. Solo 401(k) contributions are indeed business deductions that reduce this amount. I'd recommend speaking directly with a Social Security representative to confirm how they'll treat your specific situation. The calculations can get tricky, especially with self-employment income.

I've been in your exact situation! The short answer is YES - solo 401k contributions reduce your countable income for the earnings test. I was able to continue my side business after early retirement by using this strategy. When you're struggling to get through to SSA for confirmation (and we all know how impossible their phone lines are), try Claimyr.com - it's a service that gets you through to a real SSA agent without the endless waiting. I used their service to confirm this exact question last year and had an answer in under 30 minutes. They have a video showing how it works at https://youtu.be/Z-BRbJw3puU Just make sure you document everything carefully. The key is that contributions to a solo 401k are considered business expenses that reduce your net earnings from self-employment.

whats the difference between solo401k and regular 401k? i thought u need employees to have 401k

Wait I'm confused. Isn't SSI different from regular Social Security? Does the earnings limit apply to both? I get SSDI and they told me different rules apply for disability vs retirement benefits.

THE WHOLE SYSTEM IS RIGGED! Why should we be penalized for working at all?? I took early retirement at 62 also and lost THOUSANDS because I worked part-time. The government STEALS our money after we paid in our whole lives!!! The earnings limit is THEFT plain and simple!!

Thank you everyone for the helpful information! I've learned so much about how this works. To summarize what I understand now: 1. Solo 401k contributions CAN reduce my countable income for the SS earnings test 2. As a self-employed person, SSA looks at my net profit after business deductions 3. I need to be careful with documentation and might want to confirm with SSA directly 4. This strategy is legal and specifically helpful for self-employed early retirees I'm going to set up a solo 401k and aim to keep my countable income under the limit. This will let me grow my online business without worrying about benefit reductions. Really appreciate all the guidance!