Solo 401(k) Calculator: Max Contributions for the Self-Employed
Enter your net self-employment profit to see your full solo 401(k) room: the employee deferral plus the employer share, side by side with what a SEP IRA would allow on the exact same income.
Revenue minus business expenses, before any retirement contributions
Your age
Max employee deferral
$24,500
the 2026 employee limit is $24,500
Employer contribution
$22,304
20% of profit after the half self-employment tax deduction
Total solo 401(k) room
$46,804
$24,500 more than a SEP IRA on the same profit
Solo 401(k) vs. SEP IRA at $120,000 profit
| Contribution | Solo 401(k) | SEP IRA |
|---|---|---|
| Employee deferral | $24,500 | None |
| Employer share | $22,304 | $22,304 |
| Total | $46,804 | $22,304 |
Same net profit and the same 20% employer math on both sides. The SEP IRA has no employee deferral and no age-50 catch-up, which is the entire gap.
The self-employment tax math assumes a sole proprietor filing single with no W-2 wages elsewhere. Educational estimate for the 2026 tax year, not tax advice. Federal figures follow IRS inflation adjustments; state estimates use statewide rates and standard deductions only and exclude local income taxes (city, county, school district), State Disability Insurance, and credits. Where a state publishes separate married tables, married thresholds may be approximated. Verify your exact withholding with a tax professional or your payroll provider.
Both hats, both contributions
A solo 401(k) exists because a self-employed person is two people on paper: the employee and the employer. Each hat gets its own contribution. As the employee, you can defer earnings up to the standard 401(k) limit. As the employer, the business adds roughly 20% of your adjusted self-employment earnings on top. No workplace plan gives one person both levers, which is why this account is the heavyweight of freelancer retirement saving.
How the math works, in order
The IRS sequence has three steps. First, compute self-employment tax on your net profit and subtract half of it, which yields your adjusted compensation. Second, take the employee deferral: the annual limit or your adjusted compensation, whichever is smaller. Third, add the employer share, 20% of adjusted compensation for sole proprietors, with the combined total capped at the overall defined-contribution limit and never more than you earned.
Worked through $120,000 of net profit: the half self-employment tax deduction is about $8,478, leaving $111,522 of adjusted compensation. The employee deferral is $24,500, the employer share adds about $22,304, and the total room lands near $46,804. A SEP IRA on identical numbers allows only the employer-style piece, about $22,304.
Choosing between the solo 401(k) and the SEP
The comparison is mostly mechanical. Both accounts share the same 20% employer math, so the solo 401(k)'s employee deferral is a head start the SEP can never match; the two only converge once profit is high enough that the employer share alone fills the overall cap. The SEP's remaining virtues are simplicity and forgiving setup. Two one-liners worth knowing: a spouse who works in the business can double the household's room with their own deferral and employer share, and deadlines have nuances (the deferral election generally needs to exist earlier than the employer contribution, which can wait for your filing deadline), so check the current rules for your year.
Where this fits a freelance income
Irregular income makes percentage-based saving easier than fixed monthly targets: strong months fund larger contributions, lean months pause without guilt, and the employer share naturally scales with profit. If your rates are the upstream problem, the freelance rate calculator shows what your billable hour needs to cover, retirement contributions included.
Frequently asked questions
Who can open a solo 401(k)?
Anyone with self-employment income and no full-time employees other than a spouse: freelancers, contractors, sole proprietors, and single-member LLC or S-corp owners. Side-hustle income alongside a day job can qualify too, though the employee deferral limit is shared across every 401(k) you participate in that year.
How much can I contribute to a solo 401(k)?
Two pieces stack. For 2026, you can defer up to $24,500 as the employee (plus $8,000 catch-up at 50 or older), and the business adds an employer share of roughly 20% of net self-employment earnings after the half self-employment tax deduction. Combined contributions cap at $72,000, or $80,000 with the catch-up, and can never exceed your compensation.
Why does a solo 401(k) usually beat a SEP IRA?
Both accounts allow the same employer share, about 20% of adjusted self-employment earnings. The solo 401(k) adds an employee deferral on top, which the SEP lacks entirely. Until your profit is high enough that the employer share alone hits the overall cap, that deferral is pure extra room, and the solo 401(k) also offers an age-50 catch-up and, in many plans, a Roth option.
Can my spouse contribute to my solo 401(k)?
Yes. If your spouse genuinely works in the business and earns compensation from it, they can make their own employee deferral and receive their own employer share, roughly doubling the household's room without changing plans.
How accurate is this calculator?
It follows the IRS mechanics for a sole proprietor: half of self-employment tax comes off first, then the employee deferral and the 20% employer rate apply, using a single filer with no W-2 wages. Entity type changes the math (S-corp owners compute from W-2 salary at 25% instead), and elective amounts are your choice. Educational estimate for the 2026 tax year, not tax advice. Federal figures follow IRS inflation adjustments; state estimates use statewide rates and standard deductions only and exclude local income taxes (city, county, school district), State Disability Insurance, and credits. Where a state publishes separate married tables, married thresholds may be approximated. Verify your exact withholding with a tax professional or your payroll provider.
Does this calculator save my numbers?
No. Everything runs in your browser and nothing you type is stored or sent anywhere.
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