Self-employed & tax / Solo 401(k) vs SEP IRA Calculator

Solo 401(k) vs SEP IRA Calculator

US rates · checked 20 Oct 2026
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Schedule C line 31 (or your share of partnership SE income), after business expenses.

Catch-up contributions are allowed in a solo 401(k), not in a SEP IRA.

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The employee deferral limit is per person, so deferrals at a day job reduce the solo 401(k) deferral. Enter 0 if none.

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2026 IRS limit. Check irs.gov for the year you're contributing for.

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2026 IRS annual additions limit, the same for both plans. Check irs.gov for other years.

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2026 IRS cap on compensation a plan can count. Check irs.gov for other years.

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2026 SSA figure, used for the SE tax step. Check ssa.gov for other years.

Extra you can put in a solo 401(k)
$24,500.00
$18,587.05SEP IRA maximum
$43,087.05solo 401(k) maximum
43.1%solo 401(k) as a share of profit
$0solo 401(k) $43,087.05
  • Employer part (a SEP allows this)
  • Employee deferral (solo 401(k) only)
Net profit$100,000.00
Self-employment tax · 15.3% on 92.35% of profit$14,129.55
Net SE earnings · profit − ½ SE tax$92,935.23
SEP IRA: 20% of net SE earnings$18,587.05
Solo 401(k): employee deferral$24,500.00
Solo 401(k): employer part · 20% of net SE earnings$18,587.05
Solo 401(k) total$43,087.05
Difference$24,500.00

The employer part is the same in both plans; the solo 401(k) adds $24,500.00 of employee deferral on top. A SEP has less paperwork, and either plan can be opened for 2026 after the year ends.

See breakdown

How the solo 401(k) vs SEP IRA calculation works

Enter your net self-employment profit to see the most you can put into a SEP IRA and into a solo 401(k) for 2026, and the difference.

  1. Start from net SE earnings

    Net profit minus half your self-employment tax. $100,000 of profit has $14,129.55 of SE tax, leaving $92,935.23.

  2. SEP IRA: 20% of that

    The 25% plan rate works out to 20% for a sole proprietor: $18,587.05. A SEP has nothing else to add.

  3. Solo 401(k): the same 20% plus a deferral

    The employer part is the same $18,587.05. As the employee you can also defer up to $24,500 in 2026, for $43,087.05 in total.

  4. Check the shared limit

    Both plans stop at $72,000 a year in 2026 (catch-up in a solo 401(k) comes on top). A solo 401(k) reaches it at about $252,318 of profit; a SEP needs about $376,481.

Worked example. A self-employed consultant has $100,000 of net profit in 2026. SE tax is $14,129.55 and net SE earnings are $92,935.23. A SEP IRA allows $18,587.05. A solo 401(k) allows the same $18,587.05 as employer plus a $24,500 employee deferral, $43,087.05 in total: $24,500 more. At 50 or older, the $8,000 catch-up raises the solo 401(k) to $51,087.05; the SEP stays at $18,587.05.

Solo 401(k) vs SEP IRA FAQ

Solo 401k vs SEP IRA: which lets me contribute more?

At the same profit, a solo 401(k) allows more until both reach the yearly limit, because it adds an employee deferral to the same 20% employer part. On $100,000 of profit in 2026 that is $43,087.05 against $18,587.05. At about $376,481 of profit or more, both reach $72,000; only the solo 401(k) adds catch-up on top.

What are the 2026 limits for a SEP IRA and a solo 401(k)?

Both share the $72,000 annual additions limit and the $360,000 compensation limit. A solo 401(k) also allows a $24,500 employee deferral within that limit, plus an $8,000 catch-up at 50 or older ($11,250 if you turn 60 to 63 in 2026). A SEP has no deferral or catch-up. The IRS announced these in news release IR-2025-111.

Which is better if I'm over 50?

Usually the solo 401(k), because catch-up contributions are allowed only there. On $100,000 of profit the $8,000 catch-up raises the 2026 solo 401(k) maximum to $51,087.05; the SEP stays at $18,587.05.

Can I have both a SEP IRA and a solo 401(k)?

The IRS allows a SEP alongside another plan, but you then can't use Form 5305-SEP; you need a prototype or individually designed SEP. Contributions for you across both plans still share the one $72,000 limit, so a second plan rarely adds room.

What is the deadline to open each plan for 2026?

A SEP can be set up and funded up to your tax return due date, including extensions. A sole proprietor with no employees can adopt a new solo 401(k) after year-end, up to the filing deadline without extensions, and first-year employee deferrals must be paid in before that deadline.

Which has less paperwork?

The SEP. You can set it up with a short IRS form and there is no yearly filing. A solo 401(k) needs a written plan, and once plan assets reach $250,000 at year-end it must file Form 5500-EZ each year.

What if I have a 401(k) at a day job too?

The employee deferral limit is per person, not per plan, so deferrals at your job reduce what you can defer in a solo 401(k). Enter them above. The SEP and the solo 401(k) employer part are not affected.

What happens if I hire employees?

A solo 401(k) is for an owner with no employees other than a spouse; once eligible employees join, it becomes a regular 401(k) with testing. A SEP must give every eligible employee the same percentage of pay you give yourself.

Sources: IRS: One-participant 401(k) plans · IRS: Retirement plans FAQs regarding SEPs · IRS Publication 560: Retirement plans for small business · IRS: COLA increases for dollar limitations (2026 limits) · IRS news release IR-2025-111: 401(k) limit increases to $24,500 for 2026

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