Merrill, the investment arm of Bank of America, offers a self-employed 401(k) that lets sole proprietors and single-member LLC owners contribute up to $70,000 in 2026 — the same IRS limit that applies at Fidelity, Schwab, and E*TRADE. For existing Bank of America and Merrill Edge customers, the plan has one meaningful advantage: your solo 401(k) balance counts toward the Preferred Rewards combined balance threshold.
2026 Solo 401(k) Contribution Limits
| Contribution Type | 2026 Limit |
|---|---|
| Employee deferral | $23,500 |
| Catch-up, age 50–59 or 64+ | $7,500 additional |
| Super catch-up, age 60–63 (SECURE 2.0) | $11,250 additional |
| Employer profit-sharing | Up to 25% of net SE income |
| Total annual additions | $70,000 |
| Total with regular catch-up | $77,500 |
| Total with super catch-up | $81,250 |
The $70,000 limit is set by IRS Section 415 and is identical across all solo 401(k) providers. Merrill does not set a lower or different limit.
How Employee and Employer Contributions Work
A solo 401(k) lets you contribute in two roles simultaneously:
As the employee, you can defer up to $23,500 of your self-employment income in 2026. This amount is not tied to a percentage of income — you can contribute the full $23,500 even if you earned only $30,000 in net self-employment income for the year.
As the employer, you can make a profit-sharing contribution of up to 25% of your net self-employment income after deducting half of self-employment tax. The practical effective rate works out to roughly 20% of gross SE income.
Worked Example: $90,000 Self-Employment Income
On $90,000 net SE income in 2026:
- SE tax deduction: ~$6,358
- Adjusted income: $83,642
- Employer contribution (25%): $20,911
- Employee deferral: $23,500
- Total 2026 contribution: $44,411
A SEP-IRA on the same income would cap at ~$18,000. The solo 401(k) delivers roughly $26,000 in additional tax-advantaged space through the employee deferral component.
The Preferred Rewards Connection
Merrill Edge customers who bank with Bank of America can qualify for Preferred Rewards based on their combined Bank of America deposit + Merrill investment balances:
| Tier | Balance Required | Benefits |
|---|---|---|
| Gold | $20,000 | 25% credit card rewards bonus |
| Platinum | $50,000 | 50% rewards bonus; mortgage rate discount |
| Platinum Honors | $100,000 | 75% rewards bonus; full benefits |
Your Merrill self-employed 401(k) balance counts toward this combined total. For customers close to a tier threshold, a large solo 401(k) contribution can push them into a higher rewards tier — providing real cash value on top of the retirement tax benefit.
When to Consider Competitors Instead
Merrill’s self-employed 401(k) is a practical choice if you are already embedded in the Bank of America ecosystem. However, if you are choosing a solo 401(k) provider primarily on plan features, compare these differences:
| Feature | Merrill | Fidelity | Schwab | E*TRADE | Vanguard |
|---|---|---|---|---|---|
| Roth option | Confirm directly | Yes | Yes | Yes | No |
| Loans | Confirm directly | Yes | Yes | Yes | No |
| $0 account fees | Yes | Yes | Yes | Yes | $20/fund* |
| Preferred Rewards integration | Yes | No | No | No | No |
*Vanguard fee waived at $50K+ in Vanguard assets
If you want a confirmed Roth solo 401(k), Fidelity, Schwab, and E*TRADE all clearly offer this feature. Contact Merrill directly to confirm current Roth availability in their plan documentation before opening.
How to Open a Merrill Self-Employed 401(k)
- Verify eligibility — Self-employment income required; no full-time non-spouse employees permitted in the plan
- Establish by December 31, 2026 — Plan must be adopted by year-end; cannot be opened retroactively for a prior tax year
- Contact Merrill — Visit merrilledge.com or call a Merrill representative to discuss the self-employed 401(k) plan; the setup process may involve speaking with a representative
- Complete plan adoption documents — Merrill provides the required plan documentation
- Fund and invest — Access Merrill’s investment lineup including stocks, ETFs, mutual funds, and fixed income
Employee deferrals for 2026 must be made by December 31, 2026. Employer profit-sharing contributions can be funded through October 15, 2027 with a filed tax extension.
Form 5500-EZ Requirement
When your solo 401(k) balance exceeds $250,000, the IRS requires annual filing of Form 5500-EZ by July 31 of the following year. This rule applies regardless of which brokerage holds the plan. Your year-end account statement from Merrill provides the balance figures needed.
Solo 401(k) vs. SEP-IRA at Merrill
| Feature | Solo 401(k) | SEP-IRA |
|---|---|---|
| 2026 maximum | $70,000 | $70,000 |
| Better for lower earners | Yes | Less efficient |
| Plan establishment deadline | December 31 | Tax filing + extension |
| Complexity | Moderate | Simple |
| Preferred Rewards credit | Yes | Yes |
Both accounts count toward Preferred Rewards. The solo 401(k) wins on contribution efficiency for most self-employed earners; the Merrill Edge SEP-IRA is simpler to establish and has a later setup deadline.
Related Merrill Edge Retirement Guides
- Merrill Edge SEP-IRA 2026 — Limits, Setup & Comparison
- Merrill Edge Backdoor Roth IRA 2026 — Step-by-Step Guide
- Merrill Edge Traditional IRA 2026 — Deduction Rules & Limits
- Merrill Edge Roth IRA 2026 — Limits, Rules & How to Open
- Merrill Edge — Complete Investor Guide 2026
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