Retirement Plans for Self-Employed 2026
Solo 401(k)
Highest contribution limits of any retirement account
As both employer and employee, you contribute up to $23,500 as 'employee' (plus $7,500 if 50+) plus 25% of net self-employment income as 'employer'. Total possible: $70,000 in 2026.
✅ Pros
- Highest contribution ceiling of any plan
- Roth and Traditional options
- Loans allowed (unlike SEP-IRA)
- Can invest in almost anything
❌ Cons
- Only for self-employed with NO full-time employees (excluding spouse)
- More paperwork than SEP-IRA
- Annual Form 5500 required above $250k
SEP-IRA
25% of net income — easiest to open and maintain
SEP-IRA lets you contribute up to 25% of net self-employment income (max $70,000). No employee contributions — just the employer portion. Open in 15 minutes at Fidelity or Vanguard.
✅ Pros
- Incredibly simple — open like any IRA
- No special annual filings
- Works if you have variable income
- Deadline: tax deadline + extensions
❌ Cons
- No Roth option
- No catch-up contributions
- Must cover employees proportionally if you hire
SIMPLE IRA
When you have 1–100 employees to cover
SIMPLE IRA is for small businesses with employees. Employees and employer both contribute, with mandatory 3% match or 2% non-elective contribution. Lower contribution limits but covers your team.
✅ Pros
- Covers employees (required for businesses with W-2 staff)
- Employees can contribute themselves
- Lower administrative cost than full 401k
❌ Cons
- Lower limits than Solo 401k or SEP-IRA
- Mandatory employer contribution
- 2-year vesting restriction applies
The Self-Employed Retirement Math
A self-employed person earning $120,000 net can contribute $58,625 to a Solo 401(k) in 2026 (employee max $23,500 + employer 25% of $140,672 adjusted = $35,168). At 7% growth, that's $13M+ over 30 years on maxed contributions. No W-2 employee can match this.
| Plan | 2026 Limit | Type | Roth Option | Best For |
|---|---|---|---|---|
| Solo 401(k) | $70,000 | Employee + Employer | Yes | Max savings, no employees |
| SEP-IRA | $70,000 | Employer only (25%) | No | Simple, variable income |
| SIMPLE IRA | $16,500 | Employee + mandatory match | No | Businesses with employees |
| Traditional IRA | $7,000 | Personal contribution | No | Low income supplement |
| Roth IRA | $7,000 | Personal after-tax | Yes — it IS Roth | Tax-free growth, lower income |
Estimate your SE tax and retirement deduction
Self-employment taxes and retirement contributions interact. The calculator shows your full tax picture.