SEP IRA vs Solo 401(k) calculator
Self-employed retirement accounts side by side. See which one lets you save more at your income level, and which one fits your situation.
How the math works
Both accounts cap the employer-side contribution at roughly 20 percent of net self-employment income, accounting for the deductible half of self-employment tax. The Solo 401(k) adds an employee salary-deferral contribution on top, which is what usually makes it the bigger number at moderate incomes.
At very high incomes, the two accounts converge because the total cap (currently $70,000 for 2025, indexed annually) is the same. At lower incomes, the Solo 401(k) wins by a lot.
Other reasons to choose one over the other
- You plan to add employees. SEP IRA is simpler here. A Solo 401(k) stops being eligible the moment you have a W-2 employee beyond your spouse.
- You want a Roth option. Solo 401(k) offers Roth contributions. SEP IRA does not.
- You want to take a loan. Solo 401(k) allows plan loans. SEP IRA does not.
- You want minimal paperwork. SEP IRA is easier to open and run. Solo 401(k) has a Form 5500-EZ filing once assets pass $250,000.
- You value flexibility year to year. Both let you change contribution amounts annually. Solo 401(k)'s two-part structure gives a bit more room to tune.
The catch at 50+
The Solo 401(k) lets people 50 and older make a catch-up employee contribution on top of the regular limit (currently $7,500 for 2025). SEP IRA has no catch-up. If you are 50+ and maxing out, the Solo 401(k) wins clearly.
Disclaimer
Numbers use 2025 limits as a reasonable approximation and are for planning purposes only. Limits adjust each year. Your actual maximum depends on your specific situation, and retirement account setup decisions should run past a tax pro before you fund them.