SEP-IRA vs Solo 401(k) calculator
Compare what each plan lets you contribute on your self-employment income. It’s an estimate from your numbers, not advice; Krystal checks the real picture on a call.
Schedule C or K-1 net income.
Catch-up contributions start at 50.
Plan preferences
Solo 401(k) maximum contribution
Illustrative$52,381 / year
The Solo 401(k) allows a larger contribution
$24,500 more a year in contributions. Estimated effect: about $5,880, based on your inputs. Not a promise of savings.
| Solo 401(k) | Estimate |
|---|---|
| Estimated tax savings | $12,571 |
| 5-year contribution difference | $122,500 |
- $24,500 employee deferral
Side by side
Comparison
SEP-IRA: $27,881
| Item | Value |
|---|---|
| SEP-IRA | $27,881 |
| Solo 401(k) · Recommended | $52,381 |
| Contribution | SEP-IRA | Solo 401(k) |
|---|---|---|
| Employee contribution | $0 | $24,500 |
| Employer contribution | $27,881 | $27,881 |
| Estimated tax savings | ~$6,691 | ~$12,571 |
| Maximum | $27,881 | $52,381 |
SEP-IRA: for and against
For
- Very easy to set up: open one at any brokerage
- No annual filing requirements
- Can be set up until the tax filing deadline
Against
- No Roth option
- No loan provisions
- No catch-up contributions
Solo 401(k): for and against
For
- Higher contribution limits through the employee deferral
- Roth option available
- Loan provisions (up to $50K)
- Catch-up contributions at 50+
Against
- Form 5500-EZ required once assets exceed $250K
- No employees allowed (except a spouse)
Income against contribution limits
$52,381Solo 401(k) at $150,000
$0 to $400K. Arrow keys move along the line.
$0: Solo 401(k) $0, SEP-IRA $0
| Point | Solo 401(k) | SEP-IRA |
|---|---|---|
| $0 | $0 | $0 |
| $10K | $9,294 | $1,859 |
| $20K | $18,587 | $3,717 |
| $30K | $27,881 | $5,576 |
| $40K | $31,935 | $7,435 |
| $50K | $33,794 | $9,294 |
| $60K | $35,652 | $11,152 |
| $70K | $37,511 | $13,011 |
| $80K | $39,370 | $14,870 |
| $90K | $41,228 | $16,728 |
| $100K | $43,087 | $18,587 |
| $110K | $44,946 | $20,446 |
| $120K | $46,804 | $22,304 |
| $130K | $48,663 | $24,163 |
| $140K | $50,522 | $26,022 |
| $150K | $52,381 | $27,881 |
| $160K | $54,239 | $29,739 |
| $170K | $56,098 | $31,598 |
| $180K | $57,957 | $33,457 |
| $190K | $59,815 | $35,315 |
| $200K | $61,677 | $37,177 |
| $210K | $63,650 | $39,150 |
| $220K | $65,623 | $41,123 |
| $230K | $67,596 | $43,096 |
| $240K | $69,569 | $45,069 |
| $250K | $71,543 | $47,043 |
| $260K | $72,000 | $49,016 |
| $270K | $72,000 | $50,989 |
| $280K | $72,000 | $52,962 |
| $290K | $72,000 | $54,936 |
| $300K | $72,000 | $56,909 |
| $310K | $72,000 | $58,882 |
| $320K | $72,000 | $60,855 |
| $330K | $72,000 | $62,828 |
| $340K | $72,000 | $64,802 |
| $350K | $72,000 | $66,775 |
| $360K | $72,000 | $68,748 |
| $370K | $72,000 | $70,721 |
| $380K | $72,000 | $72,000 |
| $390K | $72,000 | $72,000 |
| $400K | $72,000 | $72,000 |
- Where the Solo 401(k) leadsUp to about $252K of income, the Solo 401(k) allows significantly higher contributions because of the employee deferral ($24,500).
- Where they meetBoth plans reach the $72,000 cap at about $376K of income; above that, features such as Roth and loans set them apart.
Feature comparison
| Feature | SEP-IRA | Solo 401(k) · Pick |
|---|---|---|
| Maximum Contribution (2026)Solo 401(k) can add catch-up contributions for those 50+ | $72,000 | $72,000 (+$8,000 catch-up) |
| Employee Elective DeferralSolo 401(k) allows separate employee and employer contributions | No | Yes ($24,500) |
| Roth OptionRoth Solo 401(k) allows tax-free growth | No | Yes |
| Loan ProvisionBorrow from your Solo 401(k) without triggering taxes | No | Yes (up to $50K) |
| Catch-Up Contributions (50+)Additional $8,000 for those age 50 and older (2026) | No | Yes (+$8,000) |
| Setup ComplexitySEP-IRA is simpler to establish - just open an account | Very Easy | Moderate |
| Annual Filing RequiredSolo 401(k) requires annual filing once assets exceed $250,000 | None | Form 5500-EZ if >$250K |
| Employees AllowedSEP-IRA requires covering all eligible employees. Solo 401(k) is for owner-only businesses. | Yes (must cover all) | No (except spouse) |
| Setup DeadlineSEP-IRA can be set up until your tax filing deadline (with extensions) | Tax filing deadline | Return's due date |
| Contribution DeadlineSolo 401(k): set up by your return's due date. For the first year, deferrals can be made by the unextended due date; employer contributions by the due date with extensions. | Tax filing deadline | Due date with extensions (employer) / unextended due date (first-year deferrals) |
The stronger option on each row is in bold. The Solo 401(k) has more features (Roth, loans, higher limits at lower incomes); the SEP-IRA is simpler. If you may hire employees, the SEP-IRA is more flexible.
Key deadlines, 2026 tax year
- April 15, 2027Solo 401(k) Setup DeadlineSolo 401(k): set up by your return's due date. For the first year, deferrals can be made by the unextended due date; employer contributions by the due date with extensions.Solo 401(k)
- April 15, 2027Employee Deferral DeadlineFor the first year, deferrals can be made by the unextended due date.Solo 401(k)
- April 15, 2027Tax Filing DeadlineSEP-IRA setup and employer contributions deadlineSEP-IRA · Solo 401(k) · Extendable
- October 15, 2027Extended DeadlineWith extension: SEP-IRA and employer contributionsSEP-IRA · Solo 401(k)
- Solo 401(k): set up by your return’s due date. For the first year, deferrals can be made by the unextended due date; employer contributions by the due date with extensions.
- A SEP-IRA can be set up and funded until your tax deadline (October 15 with an extension).
- Both plans allow employer contributions until the tax filing deadline.
Multi-year projection
| Over 5 years | Solo 401(k) vs SEP-IRA |
|---|---|
| Contribution difference | +$122,500 |
| Growth on the difference | +$28,256 |
| Balance difference | +$150,756 |
| Year | SEP-IRA | Solo 401(k) | Difference |
|---|---|---|---|
| 2026 | $29,833 | $56,048 | +$26,215 |
| 2027 | $61,754 | $116,019 | +$54,265 |
| 2028 | $95,909 | $180,188 | +$84,279 |
| 2029 | $132,455 | $248,848 | +$116,393 |
| 2030 | $171,560 | $322,316 | +$150,756 |
Projections assume the same contribution every year and a 7% annual return. Actual results vary with markets and contribution timing.
An estimate for education, not tax advice. Your actual limits depend on your circumstances, including other retirement accounts and income sources.
Method
How the comparison works.
SEP-IRA: simple and flexible
A Simplified Employee Pension (SEP-IRA) lets an employer contribute up to 25% of an employee’s compensation, up to $72,000 in 2026. For the self-employed, contributions are up to 20% of net profit after half of self-employment tax.
- For: easy to set up, no annual filing, can be set up until the tax deadline
- Against: no employee deferrals, no Roth option, no loans, no catch-up contributions
Solo 401(k): higher contributions
A Solo 401(k), or Individual 401(k), allows both employee deferrals and employer contributions, so total contributions can be higher at lower incomes.
- For: higher contribution limits, Roth option, loan provisions, catch-up at 50+
- Against: annual filing once assets exceed $250K, no employees
When each plan tends to fit
For most self-employed people earning under $300,000, a Solo 401(k) allows significantly higher contributions because of the $24,500 employee deferral (2026). The gap is widest between $50,000 and $200,000 of income.
A SEP-IRA fits if you value simplicity over the maximum contribution or might hire employees.
What the calculator assumes
- IRS contribution limits for the tax year you choose (2024, 2025 or 2026)
- Employer contributions are up to 20% of net profit after half of self-employment tax (the IRS’s self-employed rate).
- Tax savings are an estimate at your marginal rate
- Projections use the same contribution every year and a fixed growth rate
FAQ
Retirement plan questions.
What is the difference between SEP-IRA and Solo 401(k)?
The main difference is contribution structure. SEP-IRA only allows employer contributions (for the self-employed, up to 20% of net profit after half of self-employment tax). Solo 401(k) allows both employee deferrals ($24,500 in 2026) plus employer contributions, enabling higher total contributions at lower income levels. Solo 401(k) also offers Roth options, loan provisions, and catch-up contributions for those 50+.
Which is better: SEP-IRA or Solo 401(k)?
Solo 401(k) typically allows higher contributions for self-employed individuals earning under $300,000 due to the employee deferral component. However, SEP-IRA is simpler to set up and maintain, has no annual filing requirements, and can be established up to your tax filing deadline. If you might hire employees, SEP-IRA offers more flexibility as Solo 401(k) doesn't allow W-2 employees other than a spouse.
What is the maximum Solo 401(k) contribution for 2026?
For 2026, the maximum Solo 401(k) contribution is $72,000 ($80,000 if age 50+). This includes up to $24,500 in employee deferrals ($32,500 if 50+) plus employer contributions of up to 20% of net profit after half of self-employment tax.
What is the deadline to set up a Solo 401(k)?
Solo 401(k): set up by your return's due date. For the first year, deferrals can be made by the unextended due date; employer contributions by the due date with extensions.
Keep reading
Related.
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Your SE tax breakdown, and how retirement contributions affect it.
QBI deduction calculator
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S-Corp tax savings calculator
Whether an S-Corp election could lower your self-employment tax.
Business entity comparison
Sole proprietorship, LLC, S-Corp, C-Corp and partnership side by side.
SEP-IRA vs Solo 401(k)
The pros and cons of each plan, in more depth.
The backdoor Roth IRA
How high earners can still contribute to a Roth IRA.
Start with fifteen minutes.
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