🌱 Introduction: The Hidden Wealth Vehicle Most Business Owners Overlook

 

Most small business owners are leaving massive wealth on the table — and they don’t even know it. They’re focused on clients, revenue, and cash flow (as they should be), but they’ve never been shown one of the most powerful wealth-building tools available to them:

 

👉 A Solo 401(k) that allows options trading (including covered calls and cash-secured puts).

 

If you’re a consultant, coach, agency owner, freelancer, designer, marketer, or content creator — especially if you’re profitable and cash-rich — a Solo 401(k) can help you build long-term, tax-advantaged wealth faster than almost any other retirement vehicle.

 

And when you combine it with simple, conservative options strategies, you turn your retirement account into a machine that:

• Grows tax-deferred or tax-free
• Generates consistent return
• Builds wealth without extra hours
• Protects you from high taxes
• Lets your contribution limits scale with your business

 

This is the heart of the MarginWise MULTIPLY pillar — using smarter systems to create compounding wealth far beyond what traditional business owners achieve.

 

Let’s break down how this works and how you can start trading options inside a Solo 401(k) right now.

 

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1️⃣ What Is a Solo 401(k) — and Why It’s a Game Changer for Small Service Businesses

 

A Solo 401(k) is a retirement plan designed for self-employed people or small business owners with no full-time employees (except a spouse).

 

But unlike IRAs or normal 401(k)s, the Solo 401(k) has three massive advantages:

 

1. Exceptionally high contribution limits

In 2025, you can contribute up to $69,000 (or more if 50+).
That’s far beyond what a Roth IRA or Traditional IRA allows.

 

2. Allows both employee and employer contributions

You contribute two ways:

• Employee: Up to $23,000 (Roth or pre-tax)
• Employer: Up to 25% of compensation
  Combined, this unlocks huge tax savings and massive wealth-building.

 

3. You can often trade options inside the account

Depending on your plan provider, you can:

• Sell covered calls
• Sell cash-secured puts
• Trade long calls/puts
• Use spreads (depending on the provider)

 

This is where things get exciting. Because when you combine high contribution limits, tax-advantaged growth, and options premiums, you unlock a compounding engine most people never experience.

 

🚀 Open your Solo401k at a reputable institution like Fidelity, E*Trade or MySolo401k.

 

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2️⃣ Roth vs Pre-Tax: Which Solo 401(k) Option Is Best for Options Traders?

 

One of the biggest decisions is whether to use a Roth Solo 401(k) or a pre-tax Solo 401(k).

 

Both are powerful — but they have different benefits.

 

Roth Solo 401(k) (Tax-FREE Growth)

• Contributions are NOT tax-deductible
• But ALL future growth is tax-free
• All options premiums become tax-free income
• All gains compound forever without IRS interference

This is the perfect choice if you want long-term tax-free wealth.

 

Pre-Tax Solo 401(k) (Tax Reduction Today)

• Contributions lower your taxable income
• More ideal for high-income years
• Still allows tax-deferred growth

 

❗ Small Business Strategy Insight

Most service-based business owners benefit from using both.
This is where MarginWise can tie your KEEP + MULTIPLY pillars together.

 

For example…

• In high-profit years: Max the pre-tax side for tax deductions
• In lower-profit years: Max the Roth side for long-term tax-free growth

 

🚀 The Profit & Wealth Blueprint helps you decide the perfect Roth vs pre-tax allocation for your business.

 

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3️⃣ Can You Really Trade Options in a Solo 401(k)? Yes — Here’s What You Need to Know

 

Not all retirement accounts allow options trading — but Solo 401(k)s often do, especially when you choose the right provider.

 

Most Solo 401(k) providers that allow trading give you access to strategies like:

 

✔ Covered Calls (Ideal for beginners)

You own 100 shares of a stock and sell a call contract against it.
This generates premium income and reduces downside risk.

 

✔ Cash-Secured Puts

You set aside cash and sell a put contract against a stock you wouldn’t mind owning.
This generates premium income and creates discounts on shares.

 

✔ Vertical Spreads

Some providers allow debit and credit spreads, which limit your risk.

 

🚫 What You Cannot Do (IRS Rules)

• No margin
• No naked options
• No borrowing
• No self-dealing

This protects your retirement funds — and keeps everything IRS-compliant.

 

🚀 Open your Solo401k at a reputable institution like Fidelity, E*Trade or MySolo401k.

 

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4️⃣ How To Set Up a Solo 401(k) (Step-by-Step for Business Owners)

 

The process feels intimidating — but it’s actually very simple.
Here’s the exact step-by-step process you want readers to follow:

 

Step 1: Confirm Eligibility

You must have:

• Self-employment income
• No full-time employees

(You can hire contractors.)

 

Step 2: Choose a Solo 401(k) provider

Your choice matters because some plans allow more trading flexibility.

Recommended providers:

• E*TRADE (best overall)
• Fidelity
• MySolo401k.net (allows checkbook control + advanced strategies)

 

Step 3: Open the plan and get an EIN

If you don’t have one already, the IRS gives them free.
🚀 Have Northwest Registered Agent do this for you!

 

Step 4: Fund your plan

You can fund it with:

• Employee contributions
• Employer contributions
• Rollovers from old 401(k)s or IRAs

 

Step 5: Enable options trading

Request trading permissions for:

• Covered calls
• Cash-secured puts
• Possibly spreads (depending on provider)

 

Step 6: Begin with a safe, consistent strategy

Most business owners begin with covered calls to generate steady income.

 

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5️⃣ The Best Options Strategies to Use in a Solo 401(k)

 

Here’s where this becomes incredibly actionable.
You want to recommend simple, conservative strategies that scale well without excessive risk.

 

1. Covered Calls (The Foundation Strategy)

This is ideal for retirement accounts because:

• It generates safe, steady premium
• It reduces cost basis
• It avoids margin
• It compounds beautifully

 

Example:
Buy 100 shares of SCHD or SPY → Sell monthly calls → Earn 1–2% per month.

 

2. Cash-Secured Puts

Risk-controlled way to acquire great stocks at a discount.
Perfect for building long-term holdings.

 

3. Wheel Strategy (Beginner-Friendly)

Many business owners love this because it’s systematic:

• Sell a cash-secured put
• Get assigned
• Sell a covered call
• Repeat

This earns consistent premium and builds shares of high-quality companies.

 

4. Long-Term Covered Calls (Poor-Man’s Covered Call Alternative)

For those who don't want full share positions.
(Some Solo 401(k)s allow LEAPS.)

🚀 Let MarginWise customize your investing strategy with our Profit & Wealth Blueprint.

 

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6️⃣ How Much Can You Actually Make? (Realistic Examples for Business Owners)

 

Now the fun part — showing what’s possible.

Let’s take a realistic scenario for a business owner using a Solo 401(k):

 

Example Portfolio: $100,000

If you earn even 0.75% per month selling conservative covered calls and CSPs:

• Monthly income: $750
• Annual income: $9,000
• 10-year income + compounding: $150,000–$210,000
• All tax-free (Roth) or tax-deferred (pre-tax)

 

If you contribute $30,000/year (very doable for profitable service businesses), the account grows even faster.

 

➡️ Learn “How to Use Tax-Advantaged Retirement Accounts to Multiply Wealth.”

 

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7️⃣ Most Common Mistakes to Avoid When Trading Options in a Solo 401(k)

 

To protect your readers (and position yourself as the expert), list these clearly but conversationally.

 

❌ Mistake 1: Using risky strategies (naked options, margin)

Not allowed — and unnecessary.

 

❌ Mistake 2: Overtrading

Options income is about consistency, not excitement.

❌ Mistake 3: Using the wrong provider

Some plans don’t allow advanced trading permissions.

 

❌ Mistake 4: Forgetting RMD and Roth rules

Provide simple reminders.

 

❌ Mistake 5: Not having a plan

Let MarginWise customize your investing strategy with our Profit & Wealth Blueprint.

 

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🌟 Final Thoughts: A Solo 401(k) Is Your Unfair Advantage

 

Most business owners work their entire lives building revenue — but very few build wealth. A Solo 401(k) changes the equation because it harnesses the two most powerful forces in finance:

• Tax advantages
• Compounding premium income

 

And unlike most investment strategies, this one grows without requiring more work.
It grows while you run your business.
It grows while you sign clients.
It grows while you’re on vacation.

 

This is what the MULTIPLY pillar is all about.

 

If you want to build your wealth the smart way, start here:
👉 Profit Snapshot — find out exactly how much you can safely contribute
👉 Profit & Wealth Blueprint — build your long-term reinvestment plan

Your future self will thank you.

 

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❓ FAQs

1. Can every Solo 401(k) trade options?
No. You need a provider that allows it.

 

2. Are options riskier inside retirement accounts?
No — they’re often safer because you avoid margin.

 

3. Is the Wheel Strategy allowed in a Solo 401(k)?
Yes, with the right provider.

 

4. Should I pick Roth or pre-tax?
Depends on income and goals — many use both.

 

5. What’s the easiest strategy to start with?
Covered calls on ETFs like SPY or SCHD.