Self-Employed Retirement Accounts: SEP-IRA, Solo 401(k) & SIMPLE IRA
Business owners have access to retirement accounts that dwarf what employees can contribute — and every dollar reduces your taxable income. Here is how to choose the right one.
Solo 401(k)
Self-employed with no full-time employees (spouse OK)
2026 Limit
$69,000 ($76,500 if 50+)
Employee
$23,000 ($30,500 if 50+)
Employer
Up to 25% of compensation
Roth Option
Yes — Roth option available
Why choose this account
SEP-IRA
Freelancers and business owners who want simplicity
2026 Limit
$69,000
Employee
N/A
Employer
Up to 25% of net self-employment income
Roth Option
No
Why choose this account
SIMPLE IRA
Small businesses with up to 100 employees
2026 Limit
$16,000 ($19,500 if 50+)
Employee
$16,000
Employer
2% fixed or 3% match
Roth Option
No
Why choose this account
The Bottom Line
For most self-employed individuals, the Solo 401(k) is the best choice — it has the highest contribution limits, a Roth option, and loan provisions. If you want simplicity and have employees, the SEP-IRA is the easiest to administer.
A business owner earning $150K net profit could contribute up to $69,000 to a Solo 401(k) — reducing their taxable income by that full amount. At a 32% marginal rate, that is over $22,000 in tax savings in a single year.