Solo 401k vs SEP IRA Calculator

Why Choose a Solo 401k?

For most self-employed individuals, a Solo 401k offers significant advantages over a SEP IRA:

  • Higher Contribution Limits: Solo 401k plans allow both employer and employee contributions, potentially letting you save more for retirement.
  • More Flexibility: You can choose between traditional (pre-tax) or Roth (after-tax) contributions for the employee portion.
  • Loan Options: Solo 401k plans may allow you to borrow from your retirement savings if needed (up to 50% or $50,000, whichever is less).

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Enter Your Information

Max: $7,000

Net Business Income: $80,000

Self-Employment Tax: $11,303.64

Income After SE Tax Deduction: $74,348.18

Maximum Contribution Comparison

Solo 401k Maximum: $0

SEP IRA Maximum: $0

Note: These calculations are based on 2024 IRS limits and account for self-employment tax deductions. For self-employed individuals, contribution limits are based on net earnings minus half of self-employment tax. The Solo 401k allows employee contributions up to $23,000 ($30,500 if age 50+) plus employer contributions of approximately 20% of net self-employment income (equivalent to 25% for corporations). SEP IRA allows up to approximately 20% of net self-employment income. Both are subject to overall limits of $69,000 ($76,500 for Solo 401k if age 50+) and cannot exceed your earned income after accounting for self-employment tax and any Traditional IRA contributions.