Compare Solo 401(k), SEP-IRA, SIMPLE IRA, and IRA options. See your maximum contribution for 2026 and find the best plan for your situation.
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The Solo 401(k) offers the highest total contribution limit at $70,000 (or $77,500 with catch-up). It allows both employee deferrals and employer profit-sharing contributions, and you can choose between Traditional and Roth options.
Important: Contribution limits shown are for the 2026 tax year. Retirement projections based on 7% estimated annual return. Actual returns vary. Consult a financial advisor for personalized advice.
Self-employed individuals have several powerful retirement savings options that offer much higher contribution limits than traditional W-2 employees. A Solo 401(k) allows you to contribute up to $70,000 in 2026 — more than double the $23,500 an employee can defer. This is because you can contribute as both employee (deferring up to $23,500) and employer (contributing up to 25% of compensation, up to the combined max of $70,000).
The SEP-IRA is simpler to set up but only allows employer contributions — you can contribute up to 25% of your net self-employment income, capped at $70,000. The SIMPLE IRA is best if you have employees, with lower limits of $16,500 plus employer match. Each option has unique advantages depending on your income, age, whether you have employees, and your retirement timeline.
Choosing the right account can save you tens of thousands of dollars in taxes each year while building substantial retirement wealth. The key is understanding the trade-offs between contribution limits, setup complexity, employee requirements, and investment flexibility.
The Solo 401(k) is generally the best option for self-employed individuals with no employees who want to maximize contributions. It allows both employee salary deferrals (up to $23,500, or $31,000 if 50+) and employer profit-sharing contributions (up to 25% of compensation), with a combined total of $70,000 ($77,500 with catch-up).
The SEP-IRA is simpler — a single form to set up — but only allows employer contributions of up to 25% of net income (max $70,000). You can't make employee-style deferrals, and if you have employees, you must contribute the same percentage for eligible workers. The SEP-IRA has no Roth option and no loan feature.
Decision framework: Choose Solo 401(k) for maximum contributions, Roth option, and loan features. Choose SEP-IRA for simplicity and if you want the flexibility to contribute only in profitable years. Choose SIMPLE IRA if you have employees and want lower administrative burden.