Solo 401(k) vs SEP IRA Calculator

At the same profit, a solo 401(k) allows more until both reach the yearly limit, because it adds an employee deferral to the same 20% employer part. On $100,000 of profit in 2026 that is $43,087.05 against $18,587.05. At about $376,481 of profit or more, both reach $72,000; only the solo 401(k) adds catch-up on top.

Both share the $72,000 annual additions limit and the $360,000 compensation limit. A solo 401(k) also allows a $24,500 employee deferral within that limit, plus an $8,000 catch-up at 50 or older ($11,250 if you turn 60 to 63 in 2026). A SEP has no deferral or catch-up. The IRS announced these in news release IR-2025-111.

Usually the solo 401(k), because catch-up contributions are allowed only there. On $100,000 of profit the $8,000 catch-up raises the 2026 solo 401(k) maximum to $51,087.05; the SEP stays at $18,587.05.

The IRS allows a SEP alongside another plan, but you then can't use Form 5305-SEP; you need a prototype or individually designed SEP. Contributions for you across both plans still share the one $72,000 limit, so a second plan rarely adds room.

A SEP can be set up and funded up to your tax return due date, including extensions. A sole proprietor with no employees can adopt a new solo 401(k) after year-end, up to the filing deadline without extensions, and first-year employee deferrals must be paid in before that deadline.

The SEP. You can set it up with a short IRS form and there is no yearly filing. A solo 401(k) needs a written plan, and once plan assets reach $250,000 at year-end it must file Form 5500-EZ each year.

The employee deferral limit is per person, not per plan, so deferrals at your job reduce what you can defer in a solo 401(k). Enter them above. The SEP and the solo 401(k) employer part are not affected.

A solo 401(k) is for an owner with no employees other than a spouse; once eligible employees join, it becomes a regular 401(k) with testing. A SEP must give every eligible employee the same percentage of pay you give yourself.