Freelance Money Tools
Retirement

Solo 401(k) or SEP IRA — which one actually lets you save more?

Same net self-employment income, two account types. We show the maximum you can defer in each and how much the winner pulls ahead.

2026 IRS numbers
Stays on your device
No account

Tax and payroll data last updated: July 2026. Sources & methodology

Your numbers

$
Solo 401(k) allows more
$19,600

Solo 401(k): $38,187 · SEP IRA: $18,587

Solo 401(k) max
$38,187
SEP IRA max
$18,587
Adjusted compensation
$92,935

Solo 401(k) needs a plan document and payroll setup; SEP IRA can be opened closer to the filing deadline with less admin. Catch-up contributions favor Solo 401(k) for 50+. Not financial advice.

How this is calculated

Both use your adjusted self-employment earnings (net profit minus half of SE tax). SEP IRA caps at roughly 20% of that number. Solo 401(k) stacks an employee deferral on top of an employer share — usually higher at the same income, especially under age 50.

SEP wins on simplicity and setup deadline; Solo 401(k) wins on contribution room when you want to shelter more income. This page compares limits only — not investment options or custodian fees.

Formula
Solo 401(k) = employee deferral + employer share (+ catch-up); SEP ≈ 20% of comp

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Solo 401(k) limits

Employee + employer cap in one place.

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SEP IRA calculator

Roughly 20% of net earnings, pre-tax.

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Roth vs traditional

Pay tax now or later - which wins?

Common questions

Not on the same income in the same year — you'd double-count the employer share. Pick one vehicle per business for the tax year.
Low admin, late decision — you can open and fund a SEP as late as your tax filing deadline with extensions. Good when contribution limits aren't your bottleneck.
A lot. At 50+ the Solo 401(k) employee deferral jumps, which widens the gap over SEP for many earners. Use the age selector here.
Not modeled — SIMPLE has lower limits and employee rules if you hire. Solo 401(k) vs SEP is the usual fork for one-person shops.