Solo 401(k) vs. SEP‑IRA Calculator (2026)
Retirement contributions are often the largest deduction available to a profitable owner. See your 2026 room in a Solo 401(k) and a SEP-IRA side by side.
Estimated tax saved this year: about $13,729.
| Solo 401(k) breakdown | |
|---|---|
| Employee deferral (2026 limit $24,500) | $24,500 |
| Employer contribution (20% of net earnings) | $27,881 |
| Catch-up (age 50+) | $0 |
| Total | $52,381 |
2026 limits (IRS Notice 2025-67): $24,500 deferral, $72,000 total additions, $8,000 catch-up at 50+, $11,250 at ages 60–63, $360,000 compensation cap. Sole proprietor figures use net profit less half of self-employment tax. Pre-tax contributions assumed; Roth deferrals don't reduce this year's tax. Tax savings are estimated at your federal brackets plus the state rate. Educational estimate, not tax advice.
What the calculator does.
- Sole proprietors: the employer contribution is 20% of net profit after half of self-employment tax. S corp owners: 25% of W-2 salary.
- A Solo 401(k) adds the $24,500 employee deferral on top, up to $72,000 total, plus catch-up contributions of $8,000 at 50+ or $11,250 at ages 60–63.
- Estimated tax savings apply your 2026 federal brackets and the state rate you enter.
Common questions
Why is the Solo 401(k) usually higher than a SEP-IRA?
A SEP only allows the employer contribution. A Solo 401(k) allows the employer contribution plus the employee deferral and catch-up, so at most income levels it shelters more.
Can I have employees and use a Solo 401(k)?
No. A Solo 401(k) is for owners (and their spouses) with no other eligible employees. With staff, you'd look at a traditional 401(k), a SIMPLE IRA or a SEP that covers them.
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