Comprehensive Guide
Learn more in our Business & Tax Guide.
How it works
The self-employed get the most generous retirement-sheltering rules in the tax code, and this calculator finds your ceiling. Contributions are figured on your net earnings after the deductible half of self-employment tax. A SEP-IRA lets you contribute the employer share — 25% of compensation, which works out to 20% of net self-employment earnings — up to a cap of roughly $69,000. A solo 401(k) adds an employee deferral on top, up to about $24,500, which is why it nearly always shelters more at moderate incomes: on $100,000 of net income the employer part is around $18,600, and the solo 401(k) lets you stack the deferral room alongside it. The calculator reports the maximum you can shelter, the tax that saves at your marginal rate, and the split between the employer and employee parts. Two details matter. Deferrals you already made at a W-2 day job reduce only the solo 401(k) employee room, never the employer part. And the deadlines differ: a SEP-IRA can be opened and funded up to your filing deadline including extensions, while a solo 401(k) must generally be established by December 31 of the tax year. The limits are 2026 planning figures — confirm them before contributing.Formula
Employer part = 20% of adjusted earnings | + solo 401(k) deferral room, capped overall
Tips
- The employer part is 20% of net self-employment earnings — that is the SEP-IRA.
- A solo 401(k) adds an employee deferral on top, so it usually shelters more.
- Day-job 401(k) deferrals reduce only the solo 401(k) employee room, never the employer part.
- SEP-IRA can be funded up to the filing deadline; solo 401(k) must exist by December 31.
- The $69,000 cap and $24,500 deferral are 2026 planning figures — confirm before contributing.
Frequently asked questions
How much can I contribute to a SEP-IRA?
Up to 20% of your net self-employment earnings (25% of compensation), capped around $69,000 for 2026 planning. On $100,000 of net income that is roughly $18,600. The calculator works out your exact ceiling from your income.
Solo 401(k) vs SEP-IRA — which shelters more?
Usually the solo 401(k), because it adds an employee deferral (around $24,500) on top of the employer contribution. At moderate incomes that extra room is decisive. At very high incomes both approach the same overall cap.
Can I have a solo 401(k) if I have a day job?
Yes — self-employment income qualifies you. But deferrals you already made at the day job reduce only your solo 401(k) employee deferral room, never the employer profit-sharing part, so the two combine up to their separate limits.
What is the deadline to set up each account?
A SEP-IRA can be opened and funded right up to your tax-filing deadline, including extensions. A solo 401(k) must generally be established by December 31 of the tax year, even if you fund it later — so plan ahead for the 401(k).
Are SEP-IRA contributions tax deductible?
Yes — contributions reduce your taxable income for the year, saving tax at your marginal rate. The calculator shows the saving directly. The money then grows tax-deferred and is taxed as ordinary income when you withdraw it in retirement.