MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The $1,500 Solo 401(k) Tax Credit Nobody Talks About

12 Dec 2025 · 1 min

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1:25

In this video Mark Kohler explains a little‑known provision of the 2022 SECURE Act that creates a $500 tax credit each year for three years (totaling $1,500) when a business owner auto‑enrolls themselves in a Solo 401(k). He notes that many solopreneurs and S‑Corp owners miss the credit because it’s tied to an auto‑enrollment feature that is generally aimed at employees. By checking the auto‑enrollment box when setting up a Solo 401(k), the owner qualifies for the credit. Kohler outlines the typical cost of establishing a Solo 401(k) – about $1,000 when working with a lawyer – and argues that the combined $1,000 setup expense plus the $500 annual credit (effectively a $1,500 tax write‑off) means the owner is essentially making money to set up the plan. He promotes a self‑directed Solo 401(k) where the owner acts as trustee, avoiding high broker‑dealer fees and keeping overall costs low.

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Let's talk about the loophole. Now this loophole was passed in the Secure act in 2022, but it's just not talked about because it's based on two different credits. One of them is not allowed for solopreneurs or S Corp owners with the Solo 401K, so they miss the other one entirely. And what it is is the auto enrollment feature. And what it's encouraging business owners to do is auto enroll their employees in the 401k plan. Well, you're the owner of the plan, you are the employer and the so why not auto enroll yourself? Well, when you check that box, when you set up a solo 401k, you get a $500 tax credit every year for three years. That's $1,500 in tax credits. Well, a $500 tax credit is equivalent to about a fifteen hundred dollar tax deduction. So to set up a solo 401k, we charge $1,000 and you work with a real lawyer to do it. It's self directed and you can be the trustee and save a ton of money not paying some broker dealer in Wall street to run it. It's your solo 401k, very low fees. So you get a tax write off of $1,000 to set it up and another $500 tax credit, approximately $1,500 in write offs to do it. You're actually making money to set up your solo 401k. That's the loophole is simply making auto enrollment a requirement which you would do for yourself anyway.