Solo 401k vs SEP vs SIMPLE 2026
Solo 401k: highest cap ($69K+catch-up). SEP-IRA: 25% comp ($69K). SIMPLE: $16K + $3.5K catch. Choose by income, employees, complexity.
| Net SE income | — |
| Age | — |
| Marginal tax bracket | — |
| Solo 401k contribution | — |
| SEP-IRA contribution | — |
| SIMPLE IRA contribution | — |
| Solo 401k tax savings | — |
| SEP tax savings | — |
| SIMPLE tax savings | — |
| Best plan for you | — |
Self-employed individuals choose between three main retirement plans: Solo 401(k), SEP-IRA, and SIMPLE IRA. Each has different contribution limits, complexity, and rules for employees. The right choice depends on income, age, and whether you have employees.
Solo 401(k) — Best for High Earners
2026: $23,500 employee elective + 25% employer match (up to $70K total, $77.5K if 50+). Allows Roth contributions, loans, and after-tax (mega backdoor) up to $70K. Can have spouse on payroll for double cap. Required when you have NO employees other than spouse.
SEP-IRA — Simplest with Employees
2026: contribute up to 25% of net self-employment income (effectively 20% of gross), max $70K. Must contribute same percentage for all eligible employees. No catch-up. No Roth. Simple Form 5305-SEP setup.
SIMPLE IRA — Lower Cap, Low Cost
2026: $16,500 employee + $3,500 catch-up. Employer must do 2% non-elective OR 3% match. Best for businesses with employees making $30-50K. Lower admin than 401(k). 2-year rollover restriction.
Decision Matrix
Solo entrepreneur, high income → Solo 401(k). With employees, simple admin → SEP. Lower income, want low cost with employees → SIMPLE. After Roth → Solo 401(k) only. Want mega backdoor → Solo 401(k) only.
Last updated May 2026. Sources: IRS One-Participant 401k, IRS SEP.