Calculate your max Solo 401(k) contribution for 2026. Self-employed can stash $70,000 ($77,500 age 50+). Free calculator with employer + employee splits.
A Solo 401(k) is the highest-contribution retirement account available to self-employed Americans with no W-2 employees. In 2026, you can contribute up to $70,000 if you're under 50, or $77,500 if you're 50+, or $81,250 if you're age 60-63 (using the new SECURE 2.0 super catch-up). That's $46,500 more than a SEP-IRA allows for the same income, and $46,500 more than a Roth IRA. For a freelancer netting $150,000, the Solo 401(k) can shelter roughly 47% of net earnings versus a SEP-IRA's 20% cap.
This content is for educational purposes only and does not constitute financial advice. Consult a qualified financial advisor.
By Ziv Shay · Last updated: April 29, 2026
The math has three moving parts: your employee deferral, your employer profit-sharing contribution, and the $70,000 combined cap (IRC §415). Here's how to compute your max:
Worked example — sole proprietor, age 42, $200,000 Schedule C net profit:
Same person at $300,000 Schedule C net profit:
Above ~$345,000 net SE income, you hit the $70,000 ceiling and additional income produces no extra Solo 401(k) room.
| Component | Under 50 | Age 50-59 | Age 60-63 (SECURE 2.0) | Age 64+ |
|---|---|---|---|---|
| Employee deferral | $23,500 | $23,500 | $23,500 | $23,500 |
| Catch-up | $0 | $7,500 | $11,250 (super) | $7,500 |
| Employer profit-sharing | up to $46,500 | up to $46,500 | up to $46,500 | up to $46,500 |
| Combined cap | $70,000 | $77,500 | $81,250 | $77,500 |
The age 60-63 super catch-up is new under SECURE 2.0 and tapers back down at 64. If you're turning 60 in 2026, plan accordingly — the four-year window is finite.
The single biggest mistake freelancers make is assuming the "25% of compensation" employer limit applies to their gross revenue. It doesn't. The mechanics differ by entity:
Your employer contribution is 20% of net SE earnings (after the half-SE-tax deduction). Why 20% and not 25%? Because the contribution itself reduces "compensation," and 25% ÷ 1.25 = 20%. The IRS works backward from net earnings.
Employer contribution is 25% of W-2 wages you pay yourself as an officer/employee. Distributions don't count. To max the $70,000 limit at age 42, you'd need W-2 wages of roughly $186,000 ($23,500 deferral + 25% × $186,000 = $70,000).
Counter-intuitively, the sole prop hits $70,000 at lower gross revenue than an S-corp paying reasonable wages. An S-corp owner extracting $100,000 W-2 + $200,000 distributions can only contribute $23,500 + $25,000 = $48,500. The sole prop with the same $300,000 net hits the full $70,000. The S-corp wins on FICA savings; the Solo 401(k) wins on contribution capacity. Run both calculations — one of them is leaving money on the table.
Since SECURE 2.0, the employer profit-sharing portion can be Roth (after-tax) — previously only the employee deferral could be Roth. This is a structural change most freelancers haven't capitalized on yet.
For a 35-year-old in the 24% bracket who plans to retire in the 22% bracket, mixing Roth and pre-tax is rate arbitrage on minor margins. But for someone in the 12% or 22% bracket today expecting to be in the 24%+ bracket later, the full Roth Solo 401(k) is mathematically obvious. $70,000/year × 30 years at 7% real returns = $6.6 million tax-free at 65.
For more on the Roth-vs-traditional decision, see our Roth vs Traditional 401(k) breakdown and the 2026 federal tax bracket guide.
| Feature | Solo 401(k) | SEP-IRA | SIMPLE IRA |
|---|---|---|---|
| 2026 max (under 50) | $70,000 | $70,000 (but rare to reach) | $16,500 + 3% match |
| % of income to max | ~$345k SE income | ~$345k SE income | ~$550k income |
| Roth option | Yes (full) | Yes (since 2023) | Yes (since 2023) |
| Loans allowed | Yes (up to $50k) | No | No |
| Form 5500 filing | Required at $250k+ | None | None |
| Best for | Solo + spouse only | Variable income | Small biz with employees |
The Solo 401(k) wins on three margins: the employee deferral lets lower-income freelancers save aggressively (a $50k earner can stash $23,500 — impossible in a SEP), the loan provision gives liquidity, and the Roth option is fully unlocked. The trade-off is the Form 5500-EZ once your balance exceeds $250,000 — about 30 minutes a year.
The 2022 SECURE 2.0 rules dramatically loosened deadlines, but they're still misunderstood:
The S-corp deferral deadline trips up dozens of freelancers every January. If you're an S-corp owner who hasn't deferred via payroll by year-end, you've lost the employee portion ($23,500) for that year. The employer share is still funable through October.
Provider choice matters more than people realize because the cheap brokerages don't all support Roth contributions or Mega Backdoor Roth conversions:
If you only want pre-tax + Roth deferrals up to $70k, the free brokerage plans are fine. If you want to push past $70k via the Mega Backdoor Roth strategy or invest in real estate, you need a custom plan document — the prototype plans at Fidelity/Schwab don't permit after-tax contributions.
If your spouse earns income from your business — even part-time bookkeeping, design, or admin work — they can be added as the second employee, and the plan still qualifies as a "one-participant plan" (the spouse exception). This effectively doubles your household contribution to $140,000/year at the same business.
The W-2 wages you pay your spouse must be reasonable for the work performed (the IRS audits this), but for couples running a real business together, this is the largest tax-deferred shelter available outside of Defined Benefit Plans.
Maxing $70,000/year for 30 years at 7% real returns produces approximately $6.6 million in real (inflation-adjusted) dollars. At 10% nominal, the nominal balance is ~$11.5M. Compare to a maxed Roth IRA over the same period (~$700k) — the Solo 401(k) is roughly 9-10x more retirement capital for the self-employed.
For a deeper dive into long-term compounding scenarios and withdrawal strategies, see our 4% rule calculator and safe withdrawal rate guide.
Yes, but the $23,500 employee deferral limit is shared across all 401(k)s you participate in. If you defer $20,000 in your W-2 job's 401(k), you only have $3,500 of employee deferral room left in your Solo 401(k). The employer profit-sharing contribution to the Solo 401(k), however, is separate and uncapped by the W-2 plan — that's the big win for moonlighters with side income.
Yes. Even sole proprietors need an Employer Identification Number for the plan, separate from your personal SSN. You can get one free in 5 minutes at IRS.gov. Don't use your SSN — providers will reject the application, and it commingles plan and personal identities for tax purposes.
Yes — up to 50% of your balance or $50,000, whichever is less. The loan must be repaid in 5 years (15 years if used for a primary residence) at the prime rate + 1-2%. Interest is paid back to your own account. Schwab and Fidelity prototype plans don't always support loans; E*TRADE and custom plans do. This is a major advantage over SEP-IRAs, which prohibit loans entirely.
Nothing immediate. You can leave the plan open and let it grow indefinitely as long as the balance stays under the Form 5500 thresholds. You stop contributing in years with zero self-employment income. Many freelancers keep their Solo 401(k) as a rollover destination for old W-2 401(k)s — it gives you better investment options than most employer plans.
Only with a custom plan document — Fidelity, Schwab, and Vanguard prototype plans restrict you to publicly traded securities. Custom plans from MySolo401k, Carry, or self-directed providers permit real estate, private equity, crypto, tax liens, and notes, but you must follow strict prohibited-transaction rules (no buying property from family, no living in plan-owned property, no personal use). UBIT may apply to leveraged real estate. The penalties for self-dealing are severe — disqualification of the entire plan.
Withdraw the excess plus any attributable earnings before your tax filing deadline (April 15, or October 15 with extension). The earnings are taxable in the year of the original contribution. If you miss the deadline, the 6% excise tax applies for every year the excess remains in the account. File Form 5329 to report and pay. Most brokerages have a "return of excess contribution" form that automates this.
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