Vanguard Solo 401(k) 2026 — Limits, Fees & What to Know

The Vanguard Individual 401(k) lets self-employed workers contribute up to $70,000 in 2026 through a plan built entirely around Vanguard’s low-cost index funds. It is a solid choice if you are already a committed Vanguard investor — but it has two notable limitations: no Roth option and no loans. If either of those features matters to you, Fidelity or Schwab may be a better fit.

Corrected September 19, 2026: this page previously described the Individual 401(k) as a Vanguard-administered account charging a $20/fund fee waived at $50,000 in assets. That description is now out of date on more than the fee amount. Vanguard sold its Individual 401(k), Multi-SEP, and SIMPLE IRA business to Ascensus in a deal that closed in Q3 2024 (confirmed via Ascensus’s own press release, distributed on PR Newswire, and corroborated by multiple independent retirement-industry sources). New solo 401(k) accounts that hold Vanguard funds are opened and administered through Ascensus — not directly at vanguard.com — under the current fee structure described below. Existing Vanguard solo 401(k) accounts were transferred to Ascensus administration but continue to hold the same Vanguard funds.

2026 Vanguard Individual 401(k) Contribution Limits

The $70,000 annual additions limit is set by IRS Section 415. Vanguard applies the same limit as all other solo 401(k) providers — the difference is in flexibility, investment options, and fees, not in contribution ceilings.

Employee vs. Employer Contributions at Vanguard

Employee deferral (up to $23,500): Unlike Fidelity and Schwab, Vanguard only offers traditional (pre-tax) employee deferrals — there is no Roth option. Your deferral reduces your taxable income today, and withdrawals in retirement are taxed as ordinary income.

Employer profit-sharing (up to 25% of net SE income): Calculated after deducting half of your self-employment tax. The practical effective rate is roughly 20% of gross self-employment income.

Worked Example: $100,000 Self-Employment Income

On $100,000 net SE income in 2026:

• SE tax deduction: ~$7,065
• Adjusted income: $92,935
• Employer contribution (25%): $23,234
• Employee deferral: $23,500
• Total 2026 contribution: $46,734

A SEP-IRA at Vanguard on the same income would cap at ~$20,000. The solo 401(k)’s employee deferral component adds more than $23,000 in additional tax-deferred space.

No Roth Option: The Key Limitation

Vanguard’s Individual 401(k) accepts only pre-tax contributions. Both employee deferrals and employer profit-sharing are traditional. If you want to make Roth contributions in a solo 401(k) format — paying tax now for tax-free growth — you will need to use Fidelity, Schwab, or E*TRADE instead.

If you already have a separate Roth IRA at Vanguard (up to $7,000 in 2026), you can combine a traditional solo 401(k) with Roth IRA contributions to achieve tax diversification in retirement.

No Loans: The Second Limitation

Vanguard does not permit participant loans from Individual 401(k) accounts. This is a firm policy difference from Fidelity, Schwab, and E*TRADE, which all allow loans up to 50% of the vested balance or $50,000. If access to emergency funds matters to you, consider a competing solo 401(k) provider.

Fees Under Ascensus

Because the Individual 401(k) is now administered by Ascensus rather than Vanguard directly, the fee structure has changed from what Vanguard charged when it ran the plan itself. Multiple independent sources describing the current Ascensus-administered plan (Vanguard funds, Ascensus recordkeeping) report:

• $20 annual fee per Vanguard mutual fund held, per participant
• $20 annual per-participant custodial fee, charged separately from the per-fund fee

For an investor holding two funds (e.g., a total stock market fund and a total bond market fund), that works out to roughly $60/year ($20 × 2 funds + $20 custodial). This is a different, and for most modest balances more expensive, structure than the old Vanguard-direct $20/fund fee that waived once you held $50,000 in assets — it is not confirmed whether Ascensus offers an equivalent asset-based waiver, so confirm current fee and waiver terms directly with Ascensus (or your plan’s account statements) before assuming any waiver still applies.

There are no transaction fees on Vanguard mutual funds, and ETF trades execute commission-free.

What You Can Invest In

Vanguard’s solo 401(k) is limited to Vanguard mutual funds and ETFs:

• Vanguard Total Stock Market Index Fund (VTSAX/VTI) — 0.03% expense ratio
• Vanguard Total International Stock Index Fund (VTIAX/VXUS) — 0.07%
• Vanguard Total Bond Market Index Fund (VBTLX/BND) — 0.03%
• Vanguard Target Retirement funds — all-in-one age-based allocation

You cannot hold individual stocks, bonds, ETFs from other providers, or third-party mutual funds in this account. This is more restrictive than Fidelity or Schwab, which provide access to their full investment marketplace.

How to Open a Vanguard-Funds Individual 401(k) (via Ascensus)

1. Confirm eligibility — Self-employment income required; no full-time non-spouse employees
2. Establish by December 31, 2026 — Plan must be open by December 31 of the year you want to shelter income; you cannot open it retroactively
3. Apply through Ascensus — Since the 2024 transition, new Individual 401(k) plans holding Vanguard funds are opened through Ascensus’s small-business retirement plan platform, not directly at vanguard.com
4. Complete the plan adoption agreement — Ascensus provides the documentation
5. Fund and invest — Transfer money or roll over a prior employer 401(k)

Employee deferrals must be made by December 31, 2026. Employer profit-sharing can be funded through October 15, 2027 if you file a tax extension.

Form 5500-EZ Requirement

When your Vanguard Individual 401(k) exceeds $250,000, you must file IRS Form 5500-EZ annually by July 31 of the following year. Penalties for missing this filing are substantial — up to $250 per day.

Vanguard Solo 401(k) vs. Competitors

If you already have the bulk of your investments at Vanguard and value the Vanguard fund lineup above all else, the Vanguard Individual 401(k) is a sound choice. If you want Roth contributions or loan access, Fidelity or Schwab are better alternatives.

Related Vanguard Retirement Guides

• Vanguard SEP-IRA 2026 — Limits, Setup & Who Should Open One
• Vanguard Backdoor Roth IRA 2026 — Step-by-Step Guide
• Vanguard Traditional IRA 2026 — Deduction Rules & Limits
• Vanguard Roth IRA 2026 — Limits, Rules & How to Open
• Vanguard — Complete Investor Guide 2026

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.