Freelance Money Tools
Retirement

The retirement account you can still open in April.

Filing season, big tax bill, no retirement plan? A SEP IRA can be opened and funded right up to your filing deadline — and every dollar in is a dollar the IRS doesn't tax this year.

2026 IRS numbers
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Tax data last updated: July 2026. Sources & methodology

Your numbers

$

1099 income minus business expenses.

Max SEP IRA contribution, 2026
$18,587

About 20% of your adjusted self-employment earnings, capped at $72,000.

Adjusted compensation
$92,935
SEP IRA max (20%)
$18,587
Solo 401(k) at same income
$38,187

At most income levels a Solo 401(k) lets you contribute more, because it stacks a $24,500employee deferral on top of the same employer share — see the comparison row above. The SEP's advantage is simplicity and a later setup deadline (your tax filing deadline, extensions included). Not financial advice.

How this is calculated

The limit is the famous "25% of compensation" — but for self-employed people, compensation means net earnings after half your SE tax and after the contribution itself. Untangle that circular definition and it lands at 20% of adjusted net earnings, which is what we compute, capped at $72,000 for 2026.

We also show what a Solo 401(k) would allow at the same income, because for most freelancers that's the better deal — the SEP has no employee-deferral layer, so it only catches up at very high incomes. The SEP's honest pitch is timing and simplicity, not size.

Formula
SEP max = 20% × (net earnings − ½ SE tax)

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Common questions

Your tax filing deadline, including extensions — for a sole proprietor, potentially October 15 of the following year. It's the only self-employed retirement plan you can set up entirely after the tax year ends, which is why CPAs reach for it during filing season.
SECURE 2.0 created Roth SEP contributions on paper, but custodian support has been slow — many brokerages still only take pre-tax SEP money. If Roth treatment matters to you, check what your custodian actually supports, or use a Solo 401(k) with a Roth sub-account.
Yes — the SEP doesn't touch your personal IRA limit, so you can max both. Note the SEP counts as an employer plan, which can limit how much of a traditional IRA contribution is deductible at higher incomes.
Employees. If you ever hire, a SEP requires you to contribute the same percentage for every eligible employee as for yourself — contribute 15% of your own pay, owe 15% of theirs. Fine as a solo operator, expensive the day you're not.