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SEP IRA vs. Solo 401(k) | 2026 Sole-Proprietor Limits

Compare estimated 2026 contribution ceilings for one unincorporated owner under 50. The model includes regular self-employment tax and compensation limits.

Quick answer: Compare 2026 contribution ceilings for one unincorporated owner under 50. Employee deferrals, adjusted compensation and employer limits all matter. This estimates regular self-employment tax, not a full return or an S-corporation plan.

SWReviewed by SwitchWize Research Desk · Last reviewed November 1, 2026
Solo 401(k) Max Contribution
$43,087
Solo 401(k) Max Contribution
$43,087
Estimated Deductible Half of Self-Employment Tax
$7,065
Estimated Adjusted Plan Compensation
$92,935
2026 Overall Ceiling: Lesser of $72,000 or Adjusted Earnings
$72,000
Maximum 2026 Solo 401(k) Employee Deferral
$24,500
SEP IRA Max Contribution
$18,587
Solo 401(k) Advantage Over SEP IRA
$24,500
Diagnostic

After an estimated $7,065 deduction for half of self-employment tax, adjusted plan compensation is about $92,935. Estimated contributions are $18,587 to a SEP IRA and $43,087 to a Solo 401(k).

That's an estimated $24,500 additional contribution capacity for the Solo 401(k), before considering catch-ups or deferrals at other employers.

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What to do next

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Your action plan
  1. 1

    Compare the leading option against your current setup

    Compare estimated 2026 contribution ceilings for one unincorporated owner under 50, including regular self-employment tax and compensation limits.

  2. 2

    Pressure-test one alternate scenario before deciding

    Assumptions change the answer, especially when rates, taxes, or timing matter.

  3. 3

    Use the linked guide or product page for the next step

    Turn the result into a prioritized action instead of treating it as a one-off number.

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This is an educational estimate, not tax, legal, investment, or lending advice. Tax rules, rates, and eligibility change and depend on your full situation. Confirm with a qualified professional or the provider before acting.

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Frequently Asked Questions

Everything you need to know.

Why does low profit limit the employer contribution?
The model applies the smallest of the 20% adjusted-compensation amount, the remaining annual ceiling and half the adjusted earnings left after employee deferrals. At $30,000 profit and no outside wages, the illustrated employer amount is $1,690.28 and combined Solo limit is $26,190.28.
Does this include catch-ups or an S corporation?
No. It assumes one owner under 50, no employees or spouse in the plan, and no employee deferrals at another employer. Additional Medicare tax, controlled groups and a complete deduction-limit calculation are not modeled.
Is the SEP IRA vs. Solo 401(k) free to use?
Yes. SwitchWize calculators are free, and you do not need an account to run scenarios or view the result.
Does using the SEP IRA vs. Solo 401(k) affect my credit score?
No. Using a calculator does not trigger a credit check. A credit impact can occur only if you apply directly with a lender, card issuer, or provider.
Are the results personalized financial advice?
No. Calculator outputs are educational estimates based on the inputs you enter. Review assumptions and confirm terms directly with providers before making a financial decision.
What should I do after seeing the result?
Use the recommendation module on this page to compare solo 401(k) providers, or run Money Map to compare this investing & retirement decision with your other opportunities.
How does SwitchWize choose related offers?
Related offers are matched by the calculator surface (ira) and ranked using SwitchWize data such as rate, fees, trust signals, product fit, and switching friction. Paid relationships do not change organic ranking order.
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Rate and offer data is reviewed on a recurring cadence and every offer module shows review context or links to the methodology and disclosure pages.
Where can I see the ranking methodology?
The SwitchWize methodology page explains how rate freshness, editorial review, affiliate disclosure, and category ranking factors work.
Can Money Map use this result?
Yes. Money Map is the broader diagnostic path: it compares savings, mortgage, cards, and debt so you can see whether this calculator result is your highest-impact next move.

Why This Matters

A Solo 401(k) can combine employee deferrals with an employer contribution. Both are limited by compensation. For a sole proprietor, the employer amount can also be limited to half the earnings left after the employee deferral. This model is not an S-corporation or multi-employer plan calculation.

How to Use It

  1. 1Enter Schedule C profit before the retirement-plan deduction.
  2. 2Enter outside Social Security wages for the regular self-employment tax estimate.
  3. 3Review estimated adjusted compensation, the SEP limit and combined Solo 401(k) limit.
  4. 4Confirm eligibility, plan terms and any deferrals at other jobs with the administrator.
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