Self-Employed Retirement Accounts

Self-employed individuals have powerful retirement saving options — often with higher contribution limits than traditional employees. The right choice depends on your income, whether you have employees, and your savings goals.

Solo 401(k)

Best for: Solopreneurs with no employees (other than a spouse).

2026 limits: Up to $23,500 employee deferral + $23,500 catch-up (age 50+) + 25% employer profit-sharing contribution. Total maximum: $69,000 ($76,500 with catch-up up to $70,000 depending on self-employment income limits).

Key features: Can make Roth contributions. Can borrow from the plan (loans up to $50,000 or 50% of balance). Easy to set up (one-page adoption agreement). Must file Form 5500-EZ annually when assets exceed $250,000 (otherwise no annual filing — best among small business plans). Requires a plan document from a provider like Vanguard, Fidelity, Schwab, or Solo 401(k) specialty providers. Can invest in almost anything, including real estate (with a self-directed Solo 401k).

SEP IRA

Best for: Self-employed with variable income, or businesses with employees.

2026 limits: Up to 25% of compensation or $69,000, whichever is less. Contributions are employer-side only (not employee deferrals). All contributions are pre-tax (no Roth option). Must contribute the same percentage for all eligible employees (if you have them).

Key features: Easy to set up. No annual filing required (no Form 5500). Deadline: can contribute up to your tax filing deadline (including extensions) — great for last-minute tax planning. Employees must be 21+, worked 3 of last 5 years, and earned $750+ (2026, inflation-adjusted). IRA-based: lower costs, wider provider selection.

SIMPLE IRA

Best for: Businesses with 100 or fewer employees.

2026 limits: $16,000 employee deferral + $3,500 catch-up (age 50+). Employer either matches employee contributions dollar-for-dollar up to 3% of compensation, or makes a flat 2% contribution for all eligible employees regardless of whether they contribute.

Key features: Easy to set up and low cost. No nondiscrimination testing (unlike 401(k) plans). Higher contribution limits than SEP IRA for lower-income self-employed. Two-year waiting period for rollovers in the first 2 years (can only transfer to another SIMPLE IRA). Eligibility: employees with $5,000+ compensation in any prior 2 years.

Comparison

Factor	Solo 401(k)	SEP IRA	SIMPLE IRA
Max Contribution (2026)	$69,000 ($76,500 50+)	$69,000	$16,000 ($19,500 50+)
Roth Option	Yes	No	No
Loans	Yes	No	No
Employees Must Be Covered	No (no employees allowed except spouse)	Yes (same % for all)	Yes (match or 2%)
Form 5500 Filing	If >$250k	No	No
Setup Deadline	Dec 31	Tax filing deadline	Oct 1 (or later for new businesses)
Contribution Deadline	Tax filing deadline	Tax filing deadline	Tax filing deadline

Which Should You Choose?

• No employees, want max savings: Solo 401(k) — highest contribution limits, Roth option, loan feature.
• No employees, want simplicity: SEP IRA — easier to set up, no annual filing, contribute by tax day.
• Have employees, want to minimize costs: SIMPLE IRA — lower employer contribution requirements than SEP.
• Have employees, want high business deductions: SEP IRA — can deduct up to $69k per employee (which is expensive).
• Want Roth contributions for yourself: Solo 401(k) is the only option.