Solo 401(k) / SEP-IRA Calculator
Solo 401(k) vs SEP-IRA contribution limits for self-employed workers. See your 2025 maximum, estimated tax savings, and which account puts more away.
Self-employment revenue after deductible business expenses
50+ unlocks catch-up contributions
For estimating tax savings only — contributions are pre-tax.
Your maximum contributions
Best option: Solo 401(k)
$42,087
$23,500 more than SEP-IRA · saves ~$10,101 in tax
SEP-IRA
$18,587
20% × $92,935
Solo 401(k) total
$42,087
$23,500 employee + $18,587 employer
Net for contribution
$92,935
Net SE income − ½ SE tax (the IRS base)
Employee deferral cap
$23,500
Standard cap (no catch-up)
Combined IRS cap
$70,000
2025 limit · employee + employer
See $42,087/yr compound over your career
Opens the Retirement Calculator with $3,507/mo prefilled
Which account should I pick? For most freelancers, Solo 401(k) wins — the flat $23,500 employee piece is a much bigger chunk of the contribution at moderate incomes. SEP-IRA has lower admin overhead and may be enough if your income is high (over ~$350k) where the employee deferral becomes a small fraction. You can also have both — but combined contributions across them still respect the IRS cap.
Open the account before year-end. A Solo 401(k) must be opened by Dec 31 of the year you want to contribute for — though actual contributions can be made until your tax filing deadline. SEP-IRA is more flexible — you can open and fund it right up to the tax deadline. Most brokerages offer both with no fee.
This calculator covers pre-tax (traditional) contributions only. Roth Solo 401(k) and after-tax mega-backdoor strategies exist but follow different rules; the numbers above don't account for those. Speak to a CPA if the after-tax paths fit your situation.
Have employees? SEP-IRA and Solo 401(k) only work for businesses without non-spouse employees. If you have a small staff, a SIMPLE IRA ($16,500 employee deferral in 2025) or a small- business 401(k) may be the right path. See IRS Publication 560.
How to use this calculator
- Enter your net SE income — self-employment revenue minus deductible business expenses.
- Enter your age — 50+ unlocks an extra $7,500 catch-up contribution on the Solo 401(k) employee deferral.
- Pick your filing status — affects the SE-tax calculation under the hood.
- Pick your tax year — drives the contribution caps and bracket lookup.
- Pick your marginal tax rate — for estimating the tax savings of a pre-tax contribution.
The calculator returns both account maximums side-by-side with a recommended best option.
How it works
Both account types base contributions on net SE income minus half SE tax — the IRS-defined “net earnings from self-employment for retirement purposes.” That number is multiplied by 20% to get the % contribution piece. Both also share the same compensation cap ($350,000 in 2025) — % contributions can’t be applied to income above that.
SEP-IRA
Maximum = 20% of (net SE income − ½ SE tax), capped at $70,000 (2025).
For $100,000 net SE income (single, 2025):
- SE tax: $14,130; half = $7,065
- Net for contribution: $100,000 − $7,065 = $92,935
- SEP-IRA max: 20% × $92,935 = $18,587
Solo 401(k)
Maximum = employee deferral + employer profit-share, capped at $70,000 combined ($77,500 if 50+).
- Employee deferral: $23,500 (or $31,000 if 50+) — flat amount, not income-dependent
- Employer profit-share: ~20% of net for contribution
- Combined cap applies to the sum
For the same $100,000 net SE income (age 35):
- Employee deferral: $23,500
- Employer profit-share: 20% × $92,935 = $18,587
- Solo 401(k) total: $23,500 + $18,587 = $42,087
The Solo 401(k) puts away $23,500 more than the SEP-IRA at this income level — purely because of the flat employee deferral. The gap shrinks at higher incomes (eventually both hit the $70,000 cap) and is irrelevant for very low incomes (where the cap isn’t binding either way).
Tax savings
Pre-tax contributions reduce your taxable income; the actual dollar tax savings depend on your marginal rate. At 24% federal + 6% state = 30%, a $42,000 contribution saves about $12,600 in current-year tax. The trade-off is paying tax on withdrawals in retirement — usually at a lower rate.
Frequently Asked Questions
What's the difference between a Solo 401(k) and a SEP-IRA? ▾
SEP-IRA is the simpler account: contribute up to 20% of (net SE income − ½ SE tax), capped at $70,000 in 2025. No employee/employer distinction — it's just one bucket. Solo 401(k) is two contributions in one account: an 'employee' deferral up to $23,500 ($31,000 if 50+) plus an 'employer' profit-share up to roughly 20% of net SE income, with the combined total capped at the same $70,000/$77,500.
Which account is better for me? ▾
For moderate incomes (under ~$200k net SE), Solo 401(k) almost always wins because the flat $23,500 employee deferral is a much larger fraction of the total contribution. SEP-IRA only catches up at very high incomes (~$350k+) where the 20% employer piece becomes the dominant factor and the employee deferral is negligible. Solo 401(k) has slightly more admin overhead but the contribution gap is usually big enough to justify it.
Can I have both a Solo 401(k) and a SEP-IRA? ▾
Technically yes, but contributions across both still respect the same $70,000 combined cap — you don't get to double-up. Most people pick one and stick with it. If you previously used a SEP-IRA and want to switch to a Solo 401(k), you can roll the SEP-IRA into the new Solo 401(k) plan and consolidate without a taxable event.
When does the account need to be open? ▾
Solo 401(k) must be opened by December 31 of the year you want to contribute for. Actual contributions can be made until your tax filing deadline (April 15 or extension). SEP-IRA is more flexible — you can open AND fund it right up to your tax deadline, including extensions. Most major brokerages (Fidelity, Schwab, Vanguard) offer both accounts with no setup or annual fee.
Are there Roth versions of these accounts? ▾
Yes, but only the Solo 401(k) supports a Roth option on the employee deferral. The employer profit-share portion is always pre-tax. SEP-IRA had no Roth option until SECURE 2.0 (2023) added one, but adoption is still rare and not all custodians offer it. For most freelancers wanting Roth treatment, a separate Roth IRA ($7,000-$8,000/year cap) alongside a pre-tax SEP or Solo 401(k) is the typical setup.
Can my spouse also contribute through my Solo 401(k)? ▾
Yes — if your spouse legitimately works in the business (paid for actual work performed), they can have their own employee deferral and employer profit-share. This effectively doubles the household contribution capacity. The IRS scrutinises spousal employment in solo businesses, so document the work, pay a reasonable wage via payroll, and treat them as an actual employee.