SEP-IRA vs Solo 401(k) Calculator
Self-employed? Compare your retirement plan options side-by-side. See which plan allows higher contributions, more tax savings, and fits your business situation — in just 60 seconds.
1,000+
Self-Employed Clients
Helped with retirement planning
$23,500
Employee Deferral
Solo 401(k) advantage
10+
Years Experience
Retirement plan expertise
Licensed
Texas CPA
Trusted professional
SEP-IRA vs Solo 401(k) Calculator
Find the best retirement plan for your self-employment income
SEP-IRA Max
$34,631
Solo 401(k) Max
$58,131
Difference
+$23,500
Disclaimer: This calculator provides estimates for educational purposes only. Actual contribution limits depend on your specific circumstances, including other retirement accounts and income sources. Consult with a qualified CPA for personalized retirement planning advice.
Understanding SEP-IRA vs Solo 401(k)
Both SEP-IRA and Solo 401(k) are powerful retirement savings vehicles for self-employed individuals. Understanding the key differences can help you maximize your retirement contributions and tax savings.
SEP-IRA: Simple and Flexible
A Simplified Employee Pension (SEP-IRA) allows employers to contribute up to 25% of an employee's compensation, or up to $70,000 in 2025. For self-employed individuals, contributions are based on net self-employment income.
- Pros: Easy to set up, no annual filing, can establish until tax deadline
- Cons: No employee deferrals, no Roth option, no loans, no catch-up contributions
Solo 401(k): Maximum Contributions
A Solo 401(k) (also called an Individual 401(k)) allows both employee deferrals and employer contributions. This dual contribution structure enables higher total contributions at lower income levels.
- Pros: Higher contribution limits, Roth option, loan provisions, catch-up for 50+
- Cons: Must set up by Dec 31, annual filing if assets exceed $250K, no employees allowed
When Solo 401(k) Wins
For most self-employed individuals earning under $300,000, Solo 401(k) allows significantly higher contributions due to the $23,500 employee deferral. The advantage is most pronounced at incomes between $50,000 and $200,000.
When SEP-IRA Makes Sense
Choose SEP-IRA if you value simplicity over maximum contributions, might hire employees in the future, or are establishing your plan after December 31 of the tax year.
Need help choosing the right plan?
The right retirement plan depends on your complete financial picture, including other income sources, business structure, and long-term goals. A qualified CPA can help you make the optimal choice.
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