Solo 401(k) vs SEP-IRA calculator

Why the Solo 401(k) usually allows more

A SEP-IRA takes employer contributions only: up to 25% of compensation, which for a sole proprietor works out to 20% of profit after the deduction for half of self-employment tax. A Solo 401(k) takes that same employer contribution and adds a salary deferral of up to $24,500 for 2026, inside an overall cap of $72,000. At moderate incomes the deferral is the whole difference.

Owners aged 50 or over can add a catch-up of $8,000, and those aged 60 to 63 can add $11,250. For S corporation owners whose 2025 wages from the business topped $150,000, catch-ups made in 2026 have to go in as Roth.

The deadline that matters

A SEP can be opened and funded up to your return due date, including extensions. A Solo 401(k) deferral cannot be made from compensation you have already taken, so the plan has to exist and the election has to be made by December 31. If you are reading this in the fall, that is the date to plan around. One exception: a sole proprietor with no employees who opens a brand-new plan can make the first year's deferral up to the filing deadline, not counting extensions.

Common questions

What happens when I hire?

A Solo 401(k) only works while the only participants are you and your spouse. Once you have an eligible employee you need a different plan, and a SEP would have to give them the same percentage you give yourself.

I already have a 401(k) at my day job. Can I still have one for my side business?

Yes. The $24,500 deferral limit is yours across every plan, but the $72,000 cap is measured separately for each unrelated employer, so the employer contribution to your own plan still has room.

Read Solo 401(k) or SEP-IRA, and what changes when you hire. Retirement planning sits within our work for individuals and business owners.

More free tools: the S corporation tax savings calculator, the compound interest calculator, and all our calculators.

Important: This calculator gives a general estimate for planning only. It is not tax, legal or financial advice, and using it does not make you a client of Titus CPAs. Results rely on the numbers you enter and on simplified assumptions. Tax rules, rates and deadlines change, so the results may be incomplete or wrong for your situation. Figures last reviewed October 2026. Before you file, pay or make a decision, confirm the result with your tax professional. If you don't have one, you can contact us.