SEP IRA vs Solo 401(k) Calculator 2026 β Which Plan Saves More?
Compare SEP IRA and Solo 401(k) contribution limits and tax savings for the self-employed. See max contributions, tax savings, and Roth advantage for 2026.
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After business expenses, before SE deduction Age 50+ unlocks $8,000 Solo 401(k) catch-up
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Higher Contribution Plan
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SEP IRA Max Contribution
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Solo 401(k) Max Contribution
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Extra Tax Savings with Winner
Contribution Breakdown
How to Use This SEP IRA vs Solo 401(k) Calculator
Enter your net self-employment income β this is your gross business income minus deductible business expenses, but before the self-employment tax deduction. The calculator applies the 92.35% SE income factor automatically (net SE income Γ 92.35% Γ 25% for employer contribution).
The Formula
SE-adjusted income = Net SE income Γ 92.35%
SEP IRA max = min(SE-adjusted income Γ 25%, $72,500)
Solo 401(k) employee = min($24,500 [+$8,000 if age 50+], SE-adjusted income)
Solo 401(k) employer = min(SE-adjusted income Γ 25%, $72,500 β employee portion)
Solo 401(k) total = employee + employer (cap: $72,500 or $80,500 with catch-up)
SEP IRA max = min(SE-adjusted income Γ 25%, $72,500)
Solo 401(k) employee = min($24,500 [+$8,000 if age 50+], SE-adjusted income)
Solo 401(k) employer = min(SE-adjusted income Γ 25%, $72,500 β employee portion)
Solo 401(k) total = employee + employer (cap: $72,500 or $80,500 with catch-up)
Example
Self-employed consultant, $120,000 net SE income, age 42, 22% federal rate:
SE-adjusted: $120,000 Γ 92.35% = $110,820
SEP IRA: $110,820 Γ 25% = $27,705
Solo 401(k): $24,500 employee + min($27,705 β $24,500, $110,820 Γ 25%) = $24,500 + $3,205 = $27,705
Wait β at this income, the Solo 401(k) employee deferral fills the 25% employer room, so total Solo 401(k) = $27,705 + $24,500 = capped... actually total = min($27,705 + $24,500, $72,500) = $52,205
Tax savings at 22%+5% = Solo 401(k) saves ~$14,107 vs SEP IRA ~$7,505
SE-adjusted: $120,000 Γ 92.35% = $110,820
SEP IRA: $110,820 Γ 25% = $27,705
Solo 401(k): $24,500 employee + min($27,705 β $24,500, $110,820 Γ 25%) = $24,500 + $3,205 = $27,705
Wait β at this income, the Solo 401(k) employee deferral fills the 25% employer room, so total Solo 401(k) = $27,705 + $24,500 = capped... actually total = min($27,705 + $24,500, $72,500) = $52,205
Tax savings at 22%+5% = Solo 401(k) saves ~$14,107 vs SEP IRA ~$7,505
Extended
Feature Comparison & Income Crossover
Side-by-side feature table and the exact income level where Solo 401(k) stops outperforming SEP IRA
Feature comparison and the income crossover chart showing when each plan wins.
Plan Feature Comparison
| Feature | SEP IRA | Solo 401(k) |
|---|---|---|
| 2026 Max Contribution | $72,500 | $72,500 (+$8,000 catch-up) |
| Roth Option | No | Yes (employee portion) |
| Catch-Up (age 50+) | No | $8,000 extra |
| Loans Allowed | No | Up to $50,000 |
| Employee Elective Deferral | No | $24,500 |
| Setup Complexity | Very Simple | Moderate |
| Annual Filing (Form 5500) | Not required | Required above $250K |
| Deadline to Open | Tax filing deadline | Dec 31 of tax year |
Contribution Comparison by Income Level
| Net SE Income | SEP IRA Max | Solo 401(k) Max | Solo 401(k) Advantage |
|---|
Solo 401(k) wins at most income levels below $290,000 due to the $24,500 employee elective deferral.
Frequently Asked Questions
What is the 2026 contribution limit for a SEP IRA?
For 2026, the SEP IRA contribution limit is the lesser of 25% of net self-employment income or $72,500. There is no catch-up contribution for SEP IRAs regardless of age. All contributions are employer contributions (even if you are self-employed) and are fully tax-deductible.
What is the 2026 Solo 401(k) contribution limit?
For 2026, the Solo 401(k) allows up to $24,500 in employee elective deferrals, plus 25% of net SE income as employer contributions, with a combined cap of $72,500. If you are age 50 or older, a $8,000 catch-up contribution is allowed on the employee side, raising your total potential maximum to $80,500.
At what income level does the Solo 401(k) allow higher contributions than a SEP IRA?
Below approximately $290,000 in net self-employment income, the Solo 401(k) allows higher contributions because the $24,500 employee elective deferral is added on top of the 25% employer contribution. Above that level, both plans hit the $72,500 cap simultaneously. For lower incomes, the elective deferral makes a very large difference β at $50,000 net SE income, a Solo 401(k) allows about $35,000 vs. only $12,500 in a SEP IRA.
Can I make Roth contributions to a Solo 401(k)?
Yes. Unlike a SEP IRA (which has no Roth option), a Solo 401(k) can accept Roth employee contributions. You designate all or part of your $24,500 elective deferral as Roth. Roth Solo 401(k) contributions use after-tax dollars but grow and are withdrawn tax-free in retirement. The employer profit-sharing contribution must remain pre-tax.
Can I take a loan from a Solo 401(k)?
Yes. A Solo 401(k) allows loans up to the lesser of $50,000 or 50% of your vested account balance. SEP IRAs do not permit loans at all. Solo 401(k) loans must be repaid within 5 years (except for home purchases, which may allow longer terms) with interest paid to yourself.