Solo 401(k) for high-earning independents: the 2026 math
If you are a consultant, physician, attorney, engineer or owner with $100k+ of net self-employment income, a Solo 401(k) is usually the largest tax-advantaged room you have, up to $72,000 in 2026. Here is the formula, three worked examples, the SEP comparison, and the deadlines. Approximations, not tax advice.
The 2026 limits, explained
A Solo 401(k) lets one person wear two hats. As the employee you defer salary; as the employer you contribute a share of profit. The two add up, subject to one overall cap.
Employee deferral (402(g))
Pre-tax or Roth, your choice, if the plan allows Roth deferrals.
Age-50+ catch-up
Total deferral $32,500 if you are 50 or older by year end.
Total annual additions cap (415(c))
Employee + employer combined. $80,000 including the age-50 catch-up.
Employer share, sole proprietor
Net Schedule C profit minus half of self-employment tax, times 20%.
Employer share, S-corp owner
Computed on the salary you pay yourself, not on distributions.
Roth IRA, for comparison
$8,600 at 50+. Phases out at higher incomes, see below.
Worked examples: $100k, $150k, $250k
Sole proprietor, under 50, 2026 limits. The formula:
- Net Schedule C profit × 0.9235 = self-employment tax base.
- Self-employment tax = 15.3% of that base (the 12.4% Social Security portion stops at the annual wage base; 2.9% Medicare continues).
- Net profit − ½ self-employment tax = the contribution basis.
- Employer contribution ≈ 20% of the basis.
- Solo 401(k) total = $24,500 employee deferral + employer contribution, capped at $72,000.
- SEP-IRA = the employer contribution alone.
| Net profit | SE tax | Basis | Employer ≈20% | Solo 401(k) total | SEP-IRA |
|---|---|---|---|---|---|
| $100,000 | ≈ $14,100 | ≈ $92,900 | ≈ $18,600 | ≈ $43,100 | ≈ $18,600 |
| $150,000 | ≈ $21,200 | ≈ $139,400 | ≈ $27,900 | ≈ $52,400 | ≈ $27,900 |
| $250,000 | ≈ $29,600 | ≈ $235,200 | ≈ $47,000 | ≈ $71,500 | ≈ $47,000 |
Approximations rounded to the nearest $100; at $250,000 the Social Security portion of self-employment tax is capped at the 2026 wage base, which is why the tax is not a straight 15.3%. At 50+ add the $8,000 catch-up to the Solo 401(k) column. A Roth IRA, for scale, is $7,500 at every income shown, and phases out entirely above $168,000 single or $252,000 married filing jointly. Not tax advice; confirm with your CPA or IRS Publication 560.
Solo 401(k) vs SEP-IRA: how to decide
Same employer share, same cap. Six situations that tip it one way.
You want to contribute more than 20% of net. Below roughly $250k of net income the $24,500 deferral is the whole difference between the two plans; above that the $72,000 cap starts to absorb it.
You want Roth treatment on part of your contribution. A SEP-IRA is pre-tax only; a Solo 401(k) with a Roth option lets the employee deferral go in after tax with no income phase-out.
You might want a plan loan. Solo 401(k) plans can permit loans up to the lesser of $50,000 or 50% of the balance; an IRA cannot.
You want the simplest setup and missed the calendar. A SEP can be opened and funded up to your filing deadline including extensions, for the prior year.
You have or expect eligible employees. A Solo 401(k) stops being solo once a non-spouse employee qualifies; a SEP requires equal-percentage contributions for them but stays simple.
You earn enough that ≈20% of net alone reaches $72,000, about $375k+ of net profit. At that point the plans converge on the cap and the Roth and loan features decide it.
Deadlines that catch people
The deferral election and the employer contribution run on different clocks.
| Item | Deadline |
|---|---|
| Establish the Solo 401(k) | By your tax filing deadline including extensions, under SECURE Act rules for sole proprietors. For a sole proprietor's first plan year, SECURE 2.0 §317 also allows retroactive employee deferrals if the plan is adopted by the individual return due date without extensions. In any later year the plan must exist and the deferral election be made by December 31. |
| Employee deferral election (sole proprietor) | Elect by December 31 of the tax year; the cash can follow by the filing deadline. The exception is a first-year plan under SECURE 2.0 §317, where the election can be made retroactively up to the unextended return due date. |
| Employee deferral (S-corp owner) | Runs through payroll during the year; it must be withheld from actual W-2 wages, so plan the last payroll accordingly. |
| Employer contribution | By the business's tax filing deadline including extensions: typically April 15 or October 15 for a sole proprietor, March 15 or September 15 for an S-corp. |
| SEP-IRA, open and fund | By the filing deadline including extensions. The most forgiving of the deadlines, which is the SEP's main advantage. |
| Form 5500-EZ | Required once plan assets exceed $250,000 at year end, due July 31 of the following year. |
A note on the Roth IRA at your income
For 2026 the Roth IRA contribution phases out between $153,000 and $168,000 of modified AGI for single and head-of-household filers, and between $242,000 and $252,000 for married filing jointly (IRS Notice 2025-67). Many people on this page are in or above those ranges.
Two things follow. First, a Solo 401(k) or SEP contribution reduces AGI, which can bring a borderline filer back inside the Roth range. Second, a Solo 401(k) with a Roth option has no income phase-out on the $24,500 deferral, so it is the usual route to Roth dollars once the IRA door closes. The SECURE 2.0 Saver's Match, which phases out between $20,500 and $35,500 of income for single filers and whose payment cannot be deposited into a Roth IRA in any case, is not relevant at these income levels.
Open one with Gigaverse
Applications are open. Apply, we confirm your eligibility and issue your plan documents with our custodian partner, then you fund before the deadline. A person reviews every application, usually within 2 business days, and nothing is opened until you review and sign.
What comes with it
- • The Solo 401(k), SEP and Roth IRA contribution math from your real net income, free
- • Plan documents, deadline reminders and a year-end summary for your CPA
- • A Roth IRA, the PRActicle™, with account opening rolling out
- • Quarterly-tax and expense tracking, and a clean CPA hand-off
- • Gigsy, the AI money coach, for the questions in between
Not advice: Gigaverse AI, Inc. is pursuing SEC registration as an investment adviser; until then this is education.
Solo 401(k) vs SEP IRA, side by sideCommon questions
What is the Solo 401(k) contribution limit for 2026?
Up to $72,000 in total for 2026, or $80,000 if you are 50 or older, per IRS Notice 2025-67. That is made up of an employee deferral of $24,500 (plus an $8,000 catch-up at 50+) and an employer contribution of roughly 20% of net self-employment income for a sole proprietor, or 25% of W-2 salary for an S-corp owner. The employer piece is what makes the total depend on your income.
How is the employer contribution calculated for a sole proprietor?
Start with net Schedule C profit. Multiply by 0.9235 to get the self-employment tax base, compute self-employment tax, and subtract half of that tax from net profit. Take 20% of what is left. On $100,000 of net profit that is about $18,600; on $250,000, about $47,000. The result is an approximation; the exact figure comes from the worksheet in IRS Publication 560 or your CPA.
Can I still contribute to a Roth IRA if I earn over $150,000?
It depends on filing status and modified AGI. For 2026 the Roth IRA phase-out is $153,000 to $168,000 for single and head-of-household filers and $242,000 to $252,000 for married filing jointly (IRS Notice 2025-67). Above the top of the range you cannot contribute directly. A Solo 401(k) has no income phase-out, and a Solo 401(k) with a Roth option lets you put the $24,500 deferral in after tax regardless of income.
Solo 401(k) or SEP-IRA, which should a high earner pick?
For most independents netting between $100k and $300k, the Solo 401(k) allows meaningfully more because of the $24,500 employee deferral on top of the same ≈20% employer share. The SEP wins on simplicity and on deadline flexibility, since it can be opened and funded after year end. Both hit the same $72,000 cap at very high incomes. See the decision list above and our full comparison post.
Does Gigaverse offer a Solo 401(k)?
Yes — applications are open. You apply at gigaverse.ai/solo-401k, we confirm your eligibility and issue your plan documents with our custodian partner, and you fund before the deadline. A person reviews every application, usually within 2 business days; it is not instant self-serve account opening inside the app, and nothing is opened until you review and sign. SEP IRA applications are open too, and the contribution math, quarterly-tax and expense tracking and CPA hand-off are all included.
Open your Solo 401(k)
Applications are open. Apply, we confirm your eligibility and send your plan documents, then you fund before the deadline. The calculators stay free either way.
Disclosure: Gigaverse AI, Inc. is pursuing registration as an investment adviser and is not currently registered. Nothing on this page is individualized investment, tax or legal advice. Limits and phase-outs are from IRS Notice 2025-67; the self-employed contribution method follows IRS Publication 560. All dollar figures other than the statutory limits are rounded approximations for a sole proprietor under age 50 and will differ from your return. Brokerage services for the Roth IRA are provided through a FINRA/SIPC-member broker-dealer. How we make money →