For 2026, a self-employed person can put up to $72,000 into a Solo 401(k) or SEP IRA, up to $17,000 in employee deferrals into a SIMPLE IRA, and up to $7,500 into a Traditional or Roth IRA, with additional catch-up amounts available at 50 and again between 60 and 63. Those are the ceilings. What you can actually contribute depends on your net self-employment earnings, which plan you set up, and whether you file before the deadline that applies to that plan. The self-employed retirement contribution limits below cover each account type and the mechanics that decide how close you can get to the maximum.
How Your Contribution Base Is Calculated
Every dollar limit here runs off “net earnings from self-employment,” not gross revenue and not the number on your bank statement. You start with gross business income, subtract ordinary and necessary business expenses, and then subtract the deductible half of your self-employment tax (half of the combined 12.4% Social Security and 2.9% Medicare rates you pay as both worker and employer).1Internal Revenue Service. Topic No. 554, Self-Employment Tax That adjusted figure is your compensation for retirement plan purposes.
The math gets circular for employer-style contributions in a Solo 401(k) or SEP IRA. Because the contribution itself reduces the earnings it’s based on, the stated 25% of compensation limit works out to roughly 20% of your net self-employment earnings before the plan deduction. The IRS publishes worksheets in Publication 560 and online to walk through the reduced rate.2Internal Revenue Service. Calculating Your Own Retirement Plan Contribution and Deduction Miscalculating here is one of the fastest ways to trigger an excess contribution penalty.
IRA Limits for 2026
You can contribute up to $7,500 to a Traditional or Roth IRA if you’re under 50. At 50 or older, a catch-up of $1,100 brings the total to $8,600.3Internal Revenue Service. Retirement Topics – IRA Contribution Limits The cap applies across all your IRAs combined, so splitting money between a Traditional and Roth IRA is fine as long as the total stays under the annual limit.
Roth IRA eligibility phases out by income. For 2026, single filers begin losing eligibility at $153,000 in modified adjusted gross income and lose it entirely at $168,000. For joint filers, the phase-out runs from $242,000 to $252,000.4Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs Traditional IRA deductibility has its own restrictions when you or your spouse are covered by a workplace retirement plan. Funding a SEP IRA or Solo 401(k) counts as workplace coverage, so many self-employed savers find their Traditional IRA deduction reduced or eliminated once one of those plans is in place.
Solo 401(k) Limits for 2026
A Solo 401(k) lets you contribute in two capacities. As the employee, you can defer up to $24,500 of your earned income. As the employer, you can add a profit-sharing contribution of up to 25% of compensation, which lands near 20% of net self-employment earnings once the circular calculation is applied.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The two sides together cannot exceed $72,000.4Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs
Catch-up contributions raise the ceiling for older participants. At 50 and over, an additional $8,000 in employee deferrals brings the potential total to $80,000. Between ages 60 and 63, the enhanced SECURE 2.0 catch-up is $11,250, pushing the potential total to $83,250.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Total contributions also cannot exceed 100% of your earned income in any year, which matters most at lower earnings levels.
The plan is limited to business owners with no employees other than a spouse. Hiring anyone else forces a switch to a standard 401(k) or a different plan type. Many providers offer a Roth option on the employee deferral side; the employer profit-sharing piece must still go in pre-tax. Starting in 2026, if your prior-year self-employment earnings exceeded $150,000, any catch-up contributions must be made as Roth deferrals rather than pre-tax under SECURE 2.0.
SEP IRA Limits for 2026
A SEP IRA accepts only employer contributions, capped at the lesser of 25% of compensation or $72,000 for 2026.4Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs It’s the simplest of the higher-limit plans: minimal paperwork, contributions can be adjusted or skipped in lean years, and the account can be established and funded as late as your tax filing deadline including extensions.6Internal Revenue Service. Retirement Plans FAQs Regarding SEPs
The trade-off is the absence of an employee deferral. At $100,000 in net self-employment earnings, a SEP contribution maxes out near $20,000, while a Solo 401(k) at the same income would allow that employer piece plus up to $24,500 in deferrals. For a sole proprietor with moderate income who wants to maximize savings, that gap is the reason to look past the SEP.
SIMPLE IRA Limits for 2026
The SIMPLE IRA is built for self-employed individuals and small businesses that want both employee and employer contributions without 401(k)-level administration. For 2026, the employee salary reduction limit is $17,000. The age-50 catch-up adds $4,000, and the SECURE 2.0 enhanced catch-up for ages 60 through 63 is $5,250.7Internal Revenue Service. Retirement Topics – SIMPLE IRA Contribution Limits The employer side requires either a matching contribution of up to 3% of compensation or a flat 2% nonelective contribution for all eligible participants.8Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts
Total contributions come in below both the Solo 401(k) and the SEP IRA, so this plan fits earners in the $50,000 to $80,000 range better than it fits high earners. One caution: money withdrawn from a SIMPLE IRA within the first two years of participation faces a 25% early withdrawal penalty rather than the usual 10%.9Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
Deadlines to Establish and Fund Each Plan
Deadlines vary by plan, and mixing them up can cost you a year’s contribution.
- Traditional and Roth IRAs: contributions for a tax year are due by April 15 of the following year regardless of any filing extension. The account can be opened any time before that date.10Internal Revenue Service. IRA Year-End Reminders
- SEP IRA: can be established and funded up to your tax return due date including extensions, as late as October 15 for most self-employed filers.6Internal Revenue Service. Retirement Plans FAQs Regarding SEPs
- Solo 401(k): the plan generally must be established by December 31 of the tax year to allow employee deferral contributions for that year. Employer profit-sharing contributions can be funded up to the tax filing deadline including extensions. Missing December 31 means losing the deferral portion entirely for that year.
- SIMPLE IRA: must be established by October 1 of the tax year, the earliest deadline of any plan here.
When depositing near a deadline, confirm your custodian is coding the deposit to the correct tax year. An April 14 contribution recorded as current-year rather than prior-year creates a correction that’s easier to prevent than fix.
What Happens If You Over-Contribute
Contributing more than the allowed limit triggers a 6% excise tax on the excess, and that penalty repeats every year the excess sits in the account.11Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities Self-employed savers are more exposed than W-2 workers because the contribution ceiling turns on a net earnings figure that isn’t final until the return is done. If income comes in lower than expected, contributions made earlier in the year can retroactively become excess.
You can avoid the penalty by withdrawing the excess amount plus any earnings on it before your tax return due date, including extensions.12Internal Revenue Service. Instructions for Form 5329 Once a return is filed without a correction, there’s still a six-month window after the original due date to fix it by amended return. Leaving an excess in place is one of the more expensive passive mistakes available, since the 6% compounds against the same dollars year after year.
Solo 401(k) Filing Obligation Once Assets Exceed $250,000
Contribution limits are only part of running a Solo 401(k). Once total plan assets exceed $250,000 at the end of a plan year, Form 5500-EZ must be filed annually.13Internal Revenue Service. Instructions for Form 5500-EZ The form is also required in the year you terminate the plan, whatever the asset level. The $250,000 threshold applies across all one-participant plans you maintain, so splitting balances between two Solo 401(k) plans doesn’t get you out from under it.
The penalty for missing the filing is $250 per day, up to $150,000 per late return.14Internal Revenue Service. Penalty Relief Program for Form 5500-EZ Late Filers Many Solo 401(k) holders open the account, automate contributions, and don’t notice when the balance crosses the threshold. A penalty relief program exists for late Form 5500-EZ filers that can reduce or eliminate the amount owed for prior missed years. SEP IRAs and SIMPLE IRAs don’t carry this reporting requirement, which is one reason some self-employed savers pick a SEP even when a Solo 401(k) would let them contribute more.