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Self-employed workers don’t get employer 401(k) matches, but they get access to some of the best retirement plans available — with contribution limits far higher than a regular IRA.
Quick answer: The Solo 401(k) is best for most self-employed people — up to $70,000/year in contributions with Roth option. A SEP IRA is simpler if you just want easy setup. Use a Roth IRA alongside either plan for tax-free retirement income.
Self-Employed Retirement Plans Compared (2026)
| Plan | Max Contribution | Employee + Employer | Roth Option | Best For |
|---|---|---|---|---|
| Solo 401(k) | $70,000 ($77,500 if 50+) | Yes | Yes | Most self-employed |
| SEP IRA | $70,000 | Employer only | No | Simple setup, high income |
| SIMPLE IRA | $16,500 ($20,000 if 50+) | Yes | Yes (2026+) | Self-employed with employees |
| Roth IRA | $7,000 ($8,000 if 50+) | N/A | Yes | Everyone (as supplement) |
| Traditional IRA | $7,000 ($8,000 if 50+) | N/A | No | Low income, tax deduction |
How Much You Can Contribute by Income
| Net Self-Employment Income | Solo 401(k) Max | SEP IRA Max | Difference |
|---|---|---|---|
| $50,000 | $33,077 | $9,577 | Solo saves $23,500 more |
| $75,000 | $37,346 | $13,846 | Solo saves $23,500 more |
| $100,000 | $42,131 | $18,631 | Solo saves $23,500 more |
| $150,000 | $51,386 | $27,886 | Solo saves $23,500 more |
| $200,000 | $60,192 | $36,692 | Solo saves $23,500 more |
| $290,000+ | $70,000 | $70,000 | Same at cap |
Solo 401(k) includes $23,500 employee contribution + 20% employer contribution. SEP IRA is 20% only.
Solo 401(k) Deep Dive
| Feature | Details |
|---|---|
| Eligibility | Self-employed, no employees (except spouse) |
| Employee contribution | $23,500 (2026) |
| Employer contribution | 20% of net self-employment income |
| Total max | $70,000 ($77,500 if age 50+) |
| Roth option | Yes |
| Loan provision | Yes (up to $50,000) |
| Setup deadline | December 31 of tax year |
| Contribution deadline | Tax filing deadline (April 15 or with extension) |
| Where to open | Fidelity, Schwab, Vanguard (free) |
SEP IRA Deep Dive
| Feature | Details |
|---|---|
| Eligibility | Any self-employed individual |
| Contribution | Up to 25% of compensation (20% of net SE income) |
| Total max | $70,000 (2026) |
| Roth option | No |
| Complexity | Very low — no annual filing |
| Setup deadline | Tax filing deadline (including extensions) |
| Contribution deadline | Tax filing deadline (including extensions) |
| Where to open | Any brokerage (5 minutes) |
| Important note | Must contribute same % for all employees |
Solo 401(k) vs SEP IRA
| Factor | Solo 401(k) | SEP IRA |
|---|---|---|
| Max contribution at $100K income | $42,131 | $18,631 |
| Roth contributions | Yes | No |
| Loan provision | Yes | No |
| Setup complexity | Moderate | Very easy |
| Annual filing (Form 5500-EZ) | Required if over $250K | Not required |
| Employees allowed | No (except spouse) | Yes |
| Catch-up contributions (50+) | $7,500 extra | None |
Tax Savings by Plan
| Income | No Retirement Plan Tax | With Solo 401(k) Tax | Annual Tax Savings |
|---|---|---|---|
| $75,000 | $15,600 | $7,200 | $8,400 |
| $100,000 | $22,800 | $12,800 | $10,000 |
| $150,000 | $35,400 | $22,200 | $13,200 |
| $200,000 | $48,600 | $33,400 | $15,200 |
Approximate savings from maxing Solo 401(k). Includes income tax and self-employment tax reductions.
Where to Open Each Account
| Provider | Solo 401(k) | SEP IRA | Fees |
|---|---|---|---|
| Fidelity | Yes (Roth) | Yes | $0 |
| Charles Schwab | Yes (Roth) | Yes | $0 |
| Vanguard | Yes | Yes | $0 (most funds) |
| E*TRADE | Yes (Roth) | Yes | $0 |
| TD Ameritrade | Yes | Yes | $0 |
Optimal Strategy by Income
| Net SE Income | Recommended Plan | Why |
|---|---|---|
| Under $20,000 | Roth IRA only | Simple, tax-free growth |
| $20K–$50K | Roth IRA + SEP IRA | Easy setup, decent contribution room |
| $50K–$100K | Solo 401(k) + Roth IRA | Maximize employee contributions |
| $100K–$250K | Solo 401(k) (max it) + Roth IRA | $42K–$70K in tax-advantaged space |
| Over $250K | Solo 401(k) + backdoor Roth | Max all available tax-advantaged accounts |
Bottom Line
If you’re self-employed, the Solo 401(k) is almost always the best choice. It offers the highest contribution limits, Roth options, and loan access. A SEP IRA is a good alternative if you want the simplest possible setup or if you have employees. Either way, you should be contributing to some retirement plan — the tax savings alone make it worth it.
For related guides, see how to start an LLC, LLC vs S-Corp, and self-employment tax.
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