The “Double” Solo 401k: How to Shelter $144,000+ with Your Spouse

The name “Solo 401k” is misleading. It should be called the “Owner-Only 401k.” And guess who else counts as an owner? Your spouse. There is a special exception in the IRS code that allows you to add your spouse to the plan without treating them as a common-law employee. This effectively doubles your contribution limit from $72,000 to a massive $144,000 (in 2026). If you work together, you can turn your family business into a tax-free wealth compounding machine. Here is how to legally double-dip without triggering an audit.

BMT Tax Team BMT Tax Team · 📅 Feb 2026 · ⏱️ 5 min read · INVESTING › STRATEGY
Family Limit
$144k
$72k x 2 PeopleFact
Condition
Real Work
Must be Bona FideRule
Filing
Faster
Hits $250k QuickerWarn
Couple reviewing Solo 401k plan documents with paystubs showing owner and spouse income

Teamwork pays off: Adding a working spouse can instantly double your tax shelter to $144,000.

1. The Power of “Two”

Most tax deductions are capped per household. The Solo 401k is capped per participant.

Standard Solo (You Only)
$72,000 Max
Spousal Solo (You + Spouse)
$144,000 Max

*Based on 2026 limits (Under 50). If over 50/60, limits are even higher.

2. The “Bona Fide” Rule: Is It Legit?

You cannot just put your spouse on the payroll to get a tax break. They must actually work.

✅ Valid Roles (Safe)
  • Bookkeeper: Manages invoices & expenses (5-10 hrs/week).
  • Social Media: Runs business Instagram/Ads.
  • Admin: Scheduling, customer emails.
  • Compensation: Reasonable market rate for the role.
❌ Audit Risks (Danger)
  • “Consultant”: No clear duties or hours.
  • The “Paper” Spouse: Does nothing but sign tax forms.
  • Overpayment: Paying $100k for 2 hours of filing.

3. Is It Worth It? (The FICA Tax Cost)

There is a cost to paying your spouse. You must pay payroll taxes (FICA) on their salary.

💡 The Trade-Off Formula

Paying your spouse $24,500 allows them to contribute $24,500 to the 401k.

  • Cost: You pay ~15.3% in FICA taxes (Social Security/Medicare) on that salary. (~$3,700).
  • Benefit: You save your Income Tax Rate (e.g., 24%, 32%, 37%) on that $24,500. (~$5,800 – $9,000).
  • Verdict: If your Income Tax bracket > FICA Tax rate, you win. Plus, you are building Social Security credits for your spouse.

4. Logistics: One Plan, Two Accounts

You do not open two separate Solo 401k plans. You have ONE plan with two participants.

  • Sub-Accounts: The broker (e.g., Fidelity, E*TRADE) will set up separate login IDs or sub-accounts for you and your spouse.
  • Pooled Assets: For the $250,000 Form 5500-EZ threshold, you must combine BOTH balances.
    Example: You have $150k, Spouse has $110k. Total = $260k. You MUST file Form 5500-EZ.
  • Filing Status: You typically file taxes as “Married Filing Jointly” to maximize the benefit, though it works for separate filers too.

5. Frequently Asked Questions

What about my kids?
No. The “Solo 401k exception” only applies to spouses. If you hire your child (even an adult child) as a full-time employee, you lose Solo 401k eligibility and must switch to a standard 401k (expensive).
What if we get divorced?
QDRO. If you divorce, the 401k is a marital asset. A “Qualified Domestic Relations Order” (QDRO) is used to split the account without tax penalties. Having separate sub-accounts makes this cleaner.