An Individual 401(k) can be one of the best tools for the self-employed to create a secure retirement. First, all contributions and earnings to your Individual 401(k) are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, it has very high contribution limits - allowing you to contribute more to your Individual 401(k) each year. The combined result is a retirement savings plan you can't afford to pass up.