Many freelancers and small business owners assume their only retirement option is an IRA, which tops out at $7,500 in 2026. If you are self-employed, you may be able to save many times that.
The Solo 401(k)
A Solo 401(k) is built for business owners with no employees other than a spouse. You contribute in two roles:
- As the employee: up to $24,500 in 2026, plus an $8,000 catch-up if you are 50 or older (or $11,250 if you are 60 to 63).
- As the employer: a percentage of your business earnings on top of that.
Together, total contributions can reach $72,000 in 2026, not counting catch-up contributions. Many plans also offer a Roth option.
The SEP IRA
A SEP IRA is simpler to set up and run. Contributions are employer-only, up to 25% of compensation or $72,000, whichever is less. The catch: if you have eligible employees, you generally have to contribute the same percentage for them.
Which one is better?
- If your income is modest, a Solo 401(k) usually lets you put away more, because of the employee contribution.
- If you want the least paperwork, a SEP IRA is easier.
- If you have employees, look at a regular 401(k) or a SIMPLE IRA instead.
Do not miss the deadlines
Setup and contribution deadlines differ by account type, and some must be opened before year-end. Talk to your tax preparer in the fall, not in April.
2026 limits sourced from the IRS announcement as reported by Axios.
This is general information, not tax, legal, or financial advice. Rules and limits change, so check with a tax professional about your own situation.