SEP IRA vs Solo 401(k) in 2026: Which Saves More?

Compare maximum contributions with our [SEP IRA vs Solo 401k Calculator](/calculators/finance/sep-ira-vs-solo-401k-calculator).

2026 Contribution Limits

| Feature | SEP IRA | Solo 401(k) |

|---|---|---|

| Employee contribution | None | $23,500 |

| Employer contribution | 25% of net SE income | 25% of net SE income |

| 2026 total limit | $70,000 | $70,000 |

| Catch-up (50+) | None | +$7,500 |

| Roth option | No | Yes |

| Loans allowed | No | Yes (up to $50,000) |

| Can have W-2 employees | Yes | No (owner + spouse only) |

$80,000 net self-employment income:

| Plan | Max Contribution |

|---|---|

| SEP IRA | $80,000 x 25% = $20,000 |

| Solo 401(k) | $23,500 (employee) + $14,536 (employer) = $38,036 |

Solo 401k allows $18,036 more on the same income. The employee deferral ($23,500) is what SEP IRA lacks.

You have W-2 employees (Solo 401k is owner-only)
You want simplicity — SEP IRA has zero annual filing requirements until assets exceed $250,000
Your income is high enough that both plans reach the $70,000 total cap

Net income under $150,000 — the employee deferral dramatically increases your ceiling
You want a Roth option for after-tax contributions
You want loan access (up to $50,000)
Maximum tax deductions are your priority

SEP IRA: Can be opened and funded up to October 15 of the following year (with extension).

Solo 401(k): Must be established by December 31 of the tax year. Contributions can be made until the filing deadline.

[Self-Employment Tax Calculator](/calculators/finance/self-employment-tax-calculator) — SE tax before and after contributions
[SEP IRA Calculator](/calculators/finance/sep-ira-calculator) — Max SEP IRA for your income
[Solo 401k Calculator](/calculators/finance/solo-401k-calculator) — Max Solo 401k contributions