Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Extra room in solo 401(k) vs. SEP IRA
$23,000
Max solo 401(k) contribution
$45,164
Max SEP IRA contribution
$22,164
Employee deferral portion (solo 401k only)
$23,000
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How to use this
- 1Enter net self-employment profit (schedule c) ($).
- 2Enter your age.
- 3Enter max out employee deferral in solo 401(k)?.
- 4Read your extra room in solo 401(k) vs. sep ira on the right — it updates as you type.
- 5Hit Share to keep the scenario or send it to someone.
About this calculator
Both a solo 401(k) and a SEP IRA let self-employed people shelter retirement income, but they calculate contribution room differently. A SEP IRA allows only an 'employer' contribution of up to 25% of compensation (roughly 20% of net self-employment income after the self-employment tax adjustment), capped at $69,000 for 2024. A solo 401(k) lets you make an 'employee' deferral (up to $23,000, or $30,500 at 50+) on top of the same employer profit-sharing contribution, which usually produces significantly more total contribution room at lower income levels since the employee deferral doesn't depend on a percentage of income the way the employer piece does. This calculator runs both formulas side by side on your actual net self-employment earnings so you can see the real dollar gap, which is often the deciding factor for solo business owners choosing between the two.
Worked example
Using the values the calculator loads with:
Inputs
- Net self-employment profit (Schedule C): 120000 $
- Your age: 45
- Max out employee deferral in solo 401(k)?: Yes
Results
- Extra room in solo 401(k) vs. SEP IRA: $23,000
- Max solo 401(k) contribution: $45,164
- Max SEP IRA contribution: $22,164
- Employee deferral portion (solo 401k only): $23,000
What each field means
Inputs
- Net self-employment profit (Schedule C) ($)
- The net self-employment profit (schedule c) used in the calculation, measured in $. Starts at 120000 $ so you have a working example on load.
- Your age
- The your age used in the calculation. Starts at 45 so you have a working example on load. Accepted range: 18–75.
- Max out employee deferral in solo 401(k)?
- Pick the option that matches your situation — the maths changes per option. Choices: Yes, No.
Results
- Extra room in solo 401(k) vs. SEP IRA
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Max solo 401(k) contribution
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Max SEP IRA contribution
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Employee deferral portion (solo 401k only)
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why is a solo 401(k) almost always better at lower income levels?
Because the employee deferral (up to $23,000, or $30,500 at 50+) is a flat amount independent of income, while the SEP's contribution is purely a percentage of earnings. At $60,000 of net profit, a SEP caps out around $11,000, while a solo 401(k) can reach $23,000+ from the deferral alone before even adding the employer piece — a huge gap at modest income.
Does a solo 401(k) allow Roth contributions?
Most solo 401(k) plans offered by major brokerages allow a Roth option for the employee deferral portion (though the employer profit-sharing piece is generally pretax only), while a SEP IRA is pretax-only with no Roth option under current rules. This is another point in the solo 401(k)'s favor if you want Roth flexibility.
Is a SEP IRA ever simpler or better?
SEP IRAs have lower administrative overhead — no annual Form 5500 filing requirement even at larger balances, and setup is often faster and cheaper. If you have employees (not just yourself), a SEP requires contributing the same percentage for all eligible employees, which can get expensive; a solo 401(k) generally only works if you have no employees other than a spouse.
What's the deadline to open and fund each account?
A solo 401(k) generally must be opened by December 31 of the tax year (though funding can happen up until your tax filing deadline, including extensions), while a SEP IRA can be opened and funded as late as your tax filing deadline including extensions — a real advantage if you're deciding late in the year.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Solo 401(k) vs. SEP IRA Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/solo-401k-vs-sep-ira
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/solo-401k-vs-sep-ira" target="_blank" rel="noopener">Solo 401(k) vs. SEP IRA Calculator — RevenueLab</a> (2026).</p>
Source: [Solo 401(k) vs. SEP IRA Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/solo-401k-vs-sep-ira) (2026).