Retirement Plans for Food Truck Owners: Solo 401(k), SIMPLE IRA, and the Employee Question

By Yarik Yarosh, CPA ·September 5, 2026 ·3 min read

Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

Food truck operators who run the truck alone (or with a spouse) have access to the Solo 401(k), which offers the highest contribution limits of any small business retirement plan. Once the food truck hires employees (prep cooks, cashiers, window staff), the Solo 401(k) is no longer available and the business must transition to a plan that covers eligible employees.

✓Key takeaway

Solo operator (no employees): Solo 401(k). $23,500 employee deferral + 25% of net SE income (employer contribution), up to $70,000 combined (2025). Ages 60-63 get the SECURE 2.0 super catch-up of $11,250 (total $34,750 employee deferral). Must be established by December 31 of the tax year.

With employees: The Solo 401(k) is terminated. Options:

SIMPLE IRA: $16,000 employee deferral + mandatory employer match (3% of compensation or 2% non-elective). Lower employer cost because the match only applies to participating employees. Must be established by October 1. Best for food trucks with 2-5 part-time employees where few will participate.
Safe Harbor 401(k): Higher contribution limits for the owner ($23,500 + employer match) but requires a 3% non-elective contribution or 4% match for ALL eligible employees. TPA administration costs $1,500-$3,000/year. Best when the owner wants to maximize personal contributions and has a small, stable crew.
SEP IRA: 25% of compensation for all eligible employees (the same percentage for everyone). No employee deferral. Simple to administer but expensive if the owner wants to contribute 25% and must do the same for every employee.

How does the transition work with the first employee?

Hypothetical example

Round numbers. A food truck owner has a Solo 401(k) and contributes $40,000/year. In June, the owner hires a part-time prep cook.

The Solo 401(k) must be terminated for the following plan year. Options:

Transition to SIMPLE IRA (effective January 1 of next year):

Owner deferral: $16,000 (down from $23,500 in the Solo 401(k))
Employer match for owner: 3% of $50,000 salary = $1,500
Employer match for employee (if they participate): 3% of $18,000 = $540
Owner’s total contribution: $17,500 (down from $40,000)
Total employer cost for the employee: $540

Transition to Safe Harbor 401(k):

Owner deferral: $23,500
Employer non-elective (3% of $50,000 salary): $1,500
Employee non-elective (3% of $18,000): $540
Owner’s total contribution: $25,000 (down from $40,000, but higher than SIMPLE)
TPA costs: $2,000/year
Total employer cost: $540 + $2,000 = $2,540

The SIMPLE IRA costs less ($540 vs $2,540 employer cost) but caps the owner’s contribution lower. The Safe Harbor 401(k) preserves a higher contribution ceiling for the owner.

Illustrative numbers only, not a real client and not advice for your facts.

What about seasonal employees?

Food trucks often hire seasonal employees (summer only, event season only). The retirement plan eligibility rules help here. Most plans require employees to work 1,000 hours in a 12-month period to become eligible. A seasonal employee who works 20 hours/week for 5 months (approximately 430 hours) does not meet the 1,000-hour threshold and is excluded from the plan. This keeps the employer’s retirement plan costs contained to year-round staff.

The SIMPLE IRA has a different eligibility rule: employees who earned $5,000 in any 2 preceding years AND are expected to earn $5,000 in the current year are eligible. A seasonal prep cook earning $3,000/summer would not meet this threshold.

Related guides:

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Cite this page

Yarik Yarosh, CPA. "Retirement Plans for Food Truck Owners: Solo 401(k), SIMPLE IRA, and the Employee Question." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/food-truck-retirement-plans

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.