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Solo 401(k) only. Leave at 0 to see the maximum possible.
Your 2026 results
| Solo 401(k) | SEP IRA |
|---|
Estimates only, based on 2026 IRS limits: $24,500 elective deferral (+$8,000 catch-up at 50+), $72,000 total cap ($80,000 with catch-up), SEP IRA 25% of compensation up to $72,000. Schedule C figures use the IRS net-earnings adjustment (effectively about 20% of net profit after half of self-employment tax). This is educational, not tax advice.
What is a Solo 401(k)?
A Solo 401(k), also called an individual 401(k), is a retirement plan for self-employed people with no full-time employees other than a spouse. You contribute in two roles: as the employee (elective deferrals up to $24,500 in 2026, plus $8,000 catch-up at 50+) and as the employer (profit-sharing up to 25% of compensation). Combined contributions cannot exceed $72,000, or $80,000 with catch-up.
- Roth option: employee deferrals can go in Roth, unlike a SEP IRA.
- Catch-up contributions: available at 50+, which SEP IRAs do not offer.
- Loan feature: many Solo 401(k) plans allow participant loans.
- Best for: higher earners who want to maximize contributions, S-corp owners paying themselves W-2 wages, and anyone 50+ chasing catch-ups.
What is a SEP IRA?
A SEP IRA (Simplified Employee Pension) lets employers contribute up to 25% of each eligible employee's compensation, capped at $72,000 for 2026. For the self-employed, contributions are effectively about 20% of net profit after the self-employment tax adjustment. Setup takes minutes and administration is minimal.
- Simplest to run: no annual IRS filing (no Form 5500) for most small plans.
- Flexible timing: contributions can be made up to the tax filing deadline, including extensions.
- Pre-tax only: no Roth option and no catch-up contributions.
- Best for: variable or lower income years, side businesses, and owners who want the simplest possible plan.
Frequently asked questions
Can I contribute to both a Solo 401(k) and a SEP IRA in the same year?
Yes, but the combined employer contributions across plans still face IRS limits, and employee deferral limits apply across all 401(k) plans. For most self-employed people, picking the plan with the higher allowable total is simpler and just as effective.
Which plan lets me contribute more at the same income?
Usually the Solo 401(k), because the $24,500 employee deferral ($32,500 at 50+) sits on top of the employer profit-sharing piece. A SEP IRA only has the employer piece. The gap is biggest at moderate incomes and for anyone eligible for catch-up contributions.
Does a SEP IRA have catch-up contributions?
No. Catch-up contributions are a 401(k) feature. If you are 50 or older and want the extra $8,000, a Solo 401(k) is the way to get it.
Can I do a Roth Solo 401(k)?
Yes. Employee elective deferrals to a Solo 401(k) can be designated Roth, so they grow tax-free. SEP IRA contributions are always pre-tax.
When is the contribution deadline for each plan?
Employee deferrals to a Solo 401(k) are generally due by December 31 of the tax year, while employer profit-sharing can go in by the filing deadline with extensions. SEP IRA contributions can be made up to the filing deadline including extensions, and the plan itself can be opened that late too.
Do I need to file Form 5500 for a Solo 401(k)?
Once plan assets exceed $250,000, the IRS requires Form 5500-EZ annually. SEP IRAs have no such filing requirement, which is one reason they are simpler to administer.
Guides
- Can I Contribute to Both a Solo 401(k) and a SEP IRA in the Same Year?
Yes, usually, but the $72,000 cap is shared. The Form 5305 trap, the two-business exception, and a worked example. - Solo 401(k) vs SEP IRA for S-Corp Owners: A Real-Numbers Tax Breakdown
Why the Solo 401(k) wins by $24,500 at the same W-2 salary, and the payroll tax trap SEPs create.