Gig workers and freelancers don’t get a company 401(k), but you can open your own, and the self-employed limits are generous. The two most popular options are the Solo 401(k) and the SEP-IRA. This Solo 401k vs SEP IRA calculator shows the most you can contribute to each in 2026 based on your actual 1099 profit, and roughly how much income tax that saves. For most drivers and freelancers earning under about $200,000, the Solo 401(k) lets you put away far more, because you contribute as both the “employee” and the “employer.”
Solo 401(k) vs. SEP-IRA: How Much Can You Save?
Enter your 1099 profit and age. We’ll show the most you can put into each plan for 2026 and roughly how much income tax it saves.
Your numbers
How it adds up
| Net self-employment profit | $0 |
| − Half of your self-employment tax | $0 |
| Earned income the IRS uses | $0 |
| SEP-IRA | |
| Employer contribution (20% of earned income) | $0 |
| Solo 401(k) | |
| Employee deferral (up to $24,500) | $0 |
| Employer profit-sharing (20% of earned income) | $0 |
| Age 50+ catch-up | $0 |
| Solo 401(k) total | $0 |
- Solo 401(k) is only for businesses with no employees other than you and your spouse. Most rideshare drivers, couriers and freelancers qualify.
- Deadlines differ. A SEP-IRA can be opened and funded up to your tax filing deadline, including extensions. A Solo 401(k) can also be opened after year-end for its first year, but the timing rules for the employee part are stricter. Check with your provider, and open early if you can.
- The $24,500 deferral limit is per person, shared with any W-2 job’s 401(k). The $72,000 total limit is per plan.
- These contributions cut income tax, not self-employment tax. You still owe the 15.3% SE tax on your profit.
- Solo 401(k) over $250,000 in assets needs a simple annual Form 5500-EZ. A SEP-IRA has no annual filing.
Put your numbers to work
Estimate for planning only, not tax, legal, or investment advice. Uses 2026 IRS limits: $24,500 employee deferral, $8,000 catch-up (age 50+), $11,250 catch-up (ages 60–63), $72,000 total per plan, $360,000 compensation cap. Assumes a sole proprietor or single-member LLC taxed as a sole proprietor. Confirm with a CPA or your plan provider. See all calculators.
Solo 401(k) vs SEP-IRA: common questions
Is a Solo 401(k) or SEP-IRA better for self-employed workers?
For most gig workers and freelancers, a Solo 401(k) lets you contribute more, because you add an employee deferral of up to $24,500 on top of the same 20% employer contribution a SEP-IRA allows. A SEP-IRA is simpler and can be opened later, so it can make sense at very high incomes or for last-minute savers.
How much can I contribute to a Solo 401(k) in 2026?
In 2026 you can defer up to $24,500 as the employee, plus an employer contribution of about 20% of your net self-employment earnings, up to a combined $72,000. If you are 50 or older you can add an $8,000 catch-up, or $11,250 if you are 60 to 63. Contributions cannot exceed your earned income.
Do retirement contributions lower self-employment tax?
No. Solo 401(k) and SEP-IRA contributions reduce your income tax, not your 15.3% self-employment tax, which is figured on your net profit before retirement contributions. They can still save a lot: at a 22% bracket, every $10,000 you put away cuts your federal income tax by about $2,200.