One of the better retirement planning moves in our house did not come from some fancy new strategy. It came from my wife helping me with the business.

She helps with our bookkeeping and taxes, and I am extremely grateful for that. It takes a meaningful amount of work off my plate, which is good for both of us because there are very few things I want to do less than bookkeeping after a full day of financial planning.

More importantly, it creates a planning opportunity I think a lot of self-employed couples miss. Because she legitimately works in the business, she can participate in our Solo 401(k).

That matters a lot. A one-participant 401(k) generally works for a business owner with no employees other than a spouse, which means the plan can cover both people when both are truly working in the business.

This has become even more meaningful for us because we are moving into a different phase of life. After years of steering a lot of money toward helping pay for three daughters’ college degrees, we are finally getting to redirect more of that cash flow toward our own savings. That is where the Solo 401(k) gets really interesting.

Why the spouse angle matters

When both spouses are on the payroll, the household can potentially save a lot more than most people realize.

Using a simple W-2 example, if each spouse earns $100,000 from the business, then in 2025 each spouse could potentially defer $23,500 and receive an employer contribution of $25,000. That gets you to $48,500 each, or $97,000 combined. In 2026, that same setup becomes $49,500 each, or $99,000 combined.

And if both spouses are 50 or older, it gets even better. In 2025, the standard 401(k) catch-up is $7,500. In 2026, it rises to $8,000. And for ages 60 through 63, the higher catch-up is $11,250 in both years if the plan allows it.

A SEP IRA does not give you that extra lane. My wife and I happen to fall in that 60 to 63 range now, so for once there is a small financial reward for being old enough to make noises every time you stand up.

Compare that with a SEP IRA. At $100,000 of compensation each, the SEP contribution is generally $25,000 per spouse, or $50,000 total. Still good. Just not in the same zip code.

That is one of the biggest reasons we like this strategy for the right couple. It can materially increase how much the household is able to save on a tax-advantaged basis.

Why we like it personally

For us, this is not just theory. My wife and I use a Solo 401(k) because it helps us save more, because she can participate in the plan as an employee, and because it helped open the door to a cleaner Backdoor Roth strategy.

That third point is a big one. We rolled both of our pre-tax IRAs into our 401(k)s. That mattered because the pro-rata rule frequently submarines the Backdoor Roth strategy for people with decent-sized IRA balances. In plain English, if you have pre-tax money sitting in traditional, SEP, or SIMPLE IRAs, the IRS does not let you pretend you are only converting the shiny new after-tax dollars.

This is why we often talk with clients about moving eligible pre-tax IRA or SEP IRA dollars into the Solo 401(k) plans we use. Those plans are set up to accept eligible rollovers, and that can make future Backdoor Roth contributions much cleaner. That is a very real planning benefit. It is not just trivia for retirement-plan nerds who need more hobbies.

A few quick guardrails

This strategy does need to be done correctly. Your spouse has to actually work in the business and be paid through the business. This is not a “congratulations on being married” contribution strategy.

Also, once you have employees beyond the owner and spouse, you need to pause and revisit the plan design. At that point, other options may make more sense.

And finally, do not assume you can wait until tax time to decide everything. For an existing plan, employee deferrals generally need to be elected by year-end, even if the contribution can be funded later by the tax filing deadline with extensions.

Bottom line

If your spouse is truly helping in the business, a Solo 401(k) can become a much better planning tool than many couples realize.

It can help you save more, create separate catch-up opportunities, and even fix a Backdoor Roth strategy that may not have worked before because of pre-tax IRA balances. That has been true in our house, and we have seen it be true for many clients as well.

Sometimes the best planning opportunities are not exotic at all. Sometimes they are sitting right there in your own business, quietly doing the bookkeeping.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Rob Hrnicek and not necessarily those of Raymond James.