Owner-only 401(k) plan

Owner-only 401(k) plan

The Edward Jones Owner K® is a retirement plan designed for businesses that employ only the owner and, if applicable, their spouse. It offers the highest contribution potential among defined contribution plans and includes features like Roth contributions, participant loans and strong bankruptcy protections.

This plan is especially well-suited for self-employed individuals or owner-only businesses who want higher contribution limits and are comfortable with increased administrative cost and complexity. It combines salary deferrals and employer profit-sharing contributions, allowing for flexible funding.

Business eligibility

Any business with no employees other than the owner(s) and their spouse(s) can establish an Owner-only 401(k). This includes sole proprietorships, partnerships, LLCs and corporations (S or C).

Employee eligibility

Even in owner-only plans, eligibility rules apply. While employers can choose more lenient eligibility criteria, the maximum requirements are:

• Age: 21 or older and
• Service: One year of service with at least 1,000 hours or two consecutive years of service with at least 500 hours

Who contributes

Both the owner (as an employee) and the business (as the employer) can contribute. While technically allowed, vesting schedules are not typically used in owner-only 401(k)s. Depending on plan design, employees may receive employer contributions or make salary deferrals on a traditional or Roth basis:

• Traditional: Contributions are excluded from income, grow tax deferred and are taxed as ordinary income when distributed.
• Roth: Employee salary deferrals and employer contributions are taxed as regular income when received, grow tax free, and qualified distributions are tax-free.

Total contributions (employee + employer) cannot exceed the annual maximum. See Annual Limits Page for details.

Employee contributions

Owners may defer up to 100% of compensation, subject to annual limits. Catch-up contributions are available for those age 50+, and beginning in 2025, enhanced catch-up limits may apply for individuals aged 60–63.

If your spouse works for the business, they may also contribute under the same rules.

Employer contributions

The business may contribute up to 25% of eligible compensation, which is generally the maximum amount deductible under IRS rules for defined contribution plans. Employer contributions are tax-deductible to the business.

Distributions, RMDs and plan loans

Distributions follow 401(k) rules. Withdrawals made before age 59½ may be subject to a 10% penalty unless an exception applies.

If you elected to save in a Roth account, you will not have required minimum distributions (RMDs) as the original owner. Otherwise, you must generally begin taking RMDs from your Owner-only 401(k) by April 1 the year after you turn 73. Current employees who own less than 5% of the company may be able to delay RMDs from that employer's retirement plan past this deadline as long as they continue working for the employer.

Participant loans are permitted, subject to plan rules.

What are the owner-only 401(k) deadlines ?

The plan must be established by the business’s tax-filing deadline, including extensions. Employer contributions are due by the tax-filing deadline, including extensions. 

Key characteristics summary

Choosing a plan

To compare Owner-only 401(k)s with other retirement plan types, visit Workplace Retirement Plans for Business Owners.

How Edward Jones can help

An Owner-only 401(k) can be a powerful tool for maximizing retirement savings and building wealth outside your business. An Edward Jones financial advisor can help you evaluate whether this plan fits your goals and guide you through setup, funding and investment decisions.