Updated 29 April 2026. Self-employed people have more retirement-plan choice than many employees, but the best option depends on income, whether you have employees, how much paperwork you can tolerate, and whether you want pre-tax or Roth savings.
For 2026, the employee elective deferral limit for 401(k), 403(b), most 457 plans, and the federal TSP is USD 24,500. The annual defined-contribution limit is USD 72,000 before catch-up contributions. IRA contributions are USD 7,500, with a USD 1,100 catch-up for age 50 or older.
This guide updates the core plan comparison and removes generic claims that ignored 2026 limits and filing thresholds.
The main options are a Solo 401(k), SEP IRA, SIMPLE IRA, traditional or Roth IRA, HSA, and, for high earners with predictable income, a defined benefit plan. Each has a different mix of contribution capacity, employee rules, cost, and administration.
The right plan is not always the one with the highest theoretical limit. A freelancer with uneven income may prefer flexibility, while a profitable owner-only business may use a Solo 401(k) to combine employee deferrals with employer profit-sharing.
A Solo 401(k), also called an individual 401(k), is for a business owner with no employees other than a spouse. It lets the owner contribute in two roles: as employee through elective deferrals and as employer through profit-sharing contributions.
For 2026, the elective deferral limit is USD 24,500. The total defined-contribution limit is USD 72,000 before catch-up contributions. Catch-up rules depend on age and plan design, so check the current IRS limits and your plan document before funding.
A Solo 401(k) can support Roth contributions if the plan allows them. Once plan assets exceed USD 250,000 at year-end, the owner generally needs to file Form 5500-EZ.
A SEP IRA is simpler to administer than a Solo 401(k). It is funded by employer contributions, not employee salary deferrals. That makes it easy for freelancers and small businesses that want flexibility and minimal paperwork.
The trade-off is that if you have eligible employees, contributions usually must be made for them on a comparable basis. A SEP can be powerful for a solo business, but it may become costly once you add staff.
A SIMPLE IRA is designed for small employers with 100 or fewer employees. It is easier than a full 401(k) and requires employer contributions, either through a match or nonelective contribution.
For 2026, the SIMPLE IRA employee contribution limit is USD 17,000, with catch-up contributions available for eligible older workers. It can be a practical bridge for a small team, but it is less flexible than a custom 401(k).
Traditional and Roth IRAs are useful even when you have a business plan, but income limits and deductibility rules can restrict the benefit. For 2026, the IRA contribution limit is USD 7,500, plus USD 1,100 for age 50 or older.
An HSA is not a retirement plan, but it can be a strong long-term savings tool for people covered by a qualifying high-deductible health plan. Contributions can be deductible, growth can be tax-free, and qualified medical withdrawals can be tax-free.
A defined benefit plan can allow very large deductible contributions for older, high-earning self-employed professionals. It is most suitable when income is stable because annual funding obligations, actuarial work, and administration costs are significant.
Plan establishment and funding deadlines differ. Some contributions can be made by the tax filing deadline, including extensions, while employee deferral elections may need to be in place earlier. Business structure also matters: sole proprietors, partnerships, S corporations, and C corporations calculate compensation and deductions differently.
Coordinate with a CPA before funding large amounts, especially if you also participate in an employer plan, hire employees, or want Roth treatment.
This guide is provided for general informational purposes only and does not constitute legal, tax, financial, immigration, or other professional advice from ALTERY LTD or its affiliates. Rules and fees can change after publication. Check the relevant government authority and speak with a qualified adviser before making decisions.
Altery makes no representations, warranties, or guarantees, whether express or implied, that the information in this guide is accurate, complete, or up to date.
