Self-Employed Retirement Contribution Calculator

The 2026 Solo 401(k) maximum is $72,000 in base contributions (§415(c) limit) plus catch-up contributions above that cap. The employee elective deferral limit is $24,500 (§402(g)). The employer profit-sharing contribution is 20% of net SE compensation (IRS Pub 560 self-employed rate), capped so that total base contributions do not exceed $72,000. Filers age 50-59 or 64+ add $8,000 in catch-up; filers age 60-63 add $11,250 under SECURE 2.0.

The 2026 SEP-IRA maximum is the lesser of 25% of net SE compensation or $72,000. For self-employed people, the IRS adjusts this to 20% of net SE profit (net profit minus half of SE tax) under IRS Publication 560. The $72,000 limit applies to income at or above the §401(a)(17) compensation cap of $360,000. SEP-IRA has no catch-up contribution option at any age.

A Solo 401(k) has two contribution layers: an employee elective deferral (up to $24,500) plus an employer profit-sharing contribution. A SEP-IRA has only an employer contribution. At the same income level, a Solo 401(k) almost always allows a larger total contribution because the elective deferral component adds $24,500 before the profit-sharing portion starts. The plans become equal only when income is high enough that both are capped at $72,000 (which occurs at roughly $405,000 in net profit for a filer without catch-up contributions).

No. Solo 401(k) and SEP-IRA contributions are above-the-line deductions on Form 1040 Schedule 1, not Schedule C expenses. They do not reduce SE tax. SE tax is calculated on Schedule C net profit before retirement contributions are considered. Contributions do reduce federal AGI, which lowers federal income tax and most state income taxes.

A Solo 401(k) is available to self-employed individuals and business owners with no full-time employees other than a spouse. Common eligible earners include sole proprietors, single-member LLCs, freelancers, and independent contractors with 1099 income. Partnerships and S-Corp owner-employees may also use a Solo 401(k) within plan rules.

The SECURE 2.0 Act created an enhanced catch-up limit for Solo 401(k) participants aged 60-63 at year-end: $11,250 for 2026 (versus $8,000 for ages 50-59 and 64+). This catch-up is above the §415(c) $72,000 base cap. Age 64 reverts to the $8,000 standard catch-up. SEP-IRA has no catch-up provision at any age.

Both plans cap the net SE compensation used to compute the employer contribution at $360,000 (§401(a)(17) limit for 2026). At very high net profits, the employer contribution calculation uses $360,000 as the ceiling, which caps the employer contribution at $72,000 ($360,000 × 20%). The employee elective deferral for Solo 401(k) is capped separately at $24,500 (or net profit if lower).

Generally not in the same tax year for the same business. The IRS prohibits maintaining both plan types for the same self-employment income in the same year. You can switch plan types between years. If you have both W-2 and 1099 income, you may be able to participate in an employer 401(k) for the W-2 job and a SEP-IRA for the self-employment income, subject to annual limits.