Retirement Planning for the Self-Employed

The Self-Employed Advantage

You don’t have an employer match, but you have something better: flexibility.

Solo 401(k): The Power Tool

If you have no employees (except maybe a spouse), the Solo 401(k) is unbeatable.

2026 Contribution Limits:

• Employee Contribution: Up to $23,500 ($31,000 if 50+)
• Employer Contribution: Up to 25% of compensation
• Combined Max: $69,000 ($76,500 if 50+)

Roth Option: Unlike a SEP IRA, Solo 401(k)s offer Roth contributions. Pay tax now, withdraw tax-free in retirement.

SEP IRA: The Simple Alternative

If you have employees, the Solo 401(k) gets complicated. SEP IRAs are simpler.

Contribution: Up to 25% of net self-employment income (max $69,000 in 2026).

Downside: You must contribute the same percentage for all eligible employees.

Backdoor Roth Conversions

High earners can’t contribute directly to a Roth IRA. The workaround:

1. Contribute to a Traditional IRA (no income limits).
2. Immediately convert to Roth IRA.
3. Pay tax on the conversion (minimal if done quickly).

The Mega Backdoor Roth

If your Solo 401(k) allows after-tax contributions, you can contribute an additional $46,000+ per year and convert it to Roth. This is advanced, but incredibly powerful.

Automate It

Set up automatic transfers from your business account to your retirement accounts. “Pay yourself first” isn’t just a cliché—it’s the only strategy that works.