SEP IRA vs Solo 401(k) vs SIMPLE IRA in 2026: Limits, Deadlines and Who Each Fits

SEP IRA, Solo 401(k) or SIMPLE IRA: how much can you put in for 2026, and what is the catch? As of October 24, 2026, the IRS sets a SEP at the lesser of 25% of pay or $72,000, a Solo 401(k) at $24,500 of your own deferrals plus an employer share, and a SIMPLE IRA at $17,000 (IRS 2026 cost-of-living table).

Financeradar data: of the 10 IRA providers in our IRA table, all 10 list a SEP IRA, 5 list a SIMPLE IRA and 4 list a Solo 401(k) (counted October 24, 2026), so picking the plan first narrows your custodian list more than the reverse. Each plan also has its own catch. A SEP allows employer contributions only, a Solo 401(k) is for an owner with no employees other than a spouse, and a SIMPLE requires the employer to make a match or a 2% contribution every year.

The IRS sets the ceilings. What you can deduct depends on your profit, your plan document and your tax return, and the worked example below shows how the IRS worksheet gets from profit to a number. For employee limits on other plan types, the retirement contribution limits tool lists them.

The 2026 limits side by side

These are IRS ceilings, not an offer from any custodian. A custodian can set a plan that allows less, so the amount you can use is the lower of the two.

SEP IRA: the least paperwork, and employer money only

A SEP is the simplest of the three to run. The business contributes up to 25% of each eligible employee's pay, within the 2026 dollar cap. For a sole proprietor, pay means net self-employment earnings after half of your self-employment tax and your own SEP contribution. In practice the rate that reaches you is 20%, not 25%, and the worked example below shows the figures.

The catch is the uniform rule. If you hire, every eligible employee gets the same percentage of pay, and you must contribute for everyone who worked that year, even someone who leaves before the deposit is made. The IRS SEP plan page says a SEP is for employer money alone, and the plan can accept Roth contributions. In the IRS words: "You may choose to accept Roth contributions, but are not required to."

Solo 401(k): the most room, with a head-count limit

A Solo 401(k), which the IRS calls a one-participant 401(k), follows the same rules as any 401(k). It covers a business owner with no employees, or the owner and a spouse. You can defer up to $24,500 as the employee, and no more than your net self-employment earnings, then add the employer share on top. Catch-ups come on top of that too, and the overall limit does not count them. Whether Roth deferrals are available depends on the plan document.

Two catches matter. First, the deferral limit is per person, not per plan. If you also have a W-2 job with a 401(k), the deferral is shared across both, so a salaried worker who starts a side business does not get a second full deferral. The 401(k) contribution limits for 2026 page covers the employee side. Second, once you hire an eligible employee, the plan must cover them, and the no-testing advantage ends. Plan assets matter too: the one-participant 401(k) page says a plan with $250,000 or more in assets at year-end generally must file Form 5500-EZ.

SIMPLE IRA: for small teams that will fund staff

A SIMPLE IRA suits a small business, generally one with 100 or fewer employees, and a sole proprietor can use it too. You can defer up to $17,000 for 2026, or $18,100 if the business has 25 or fewer employees. The employer then picks one of two contributions: a match of up to 3% of pay, which can be cut to as low as 1% in limited years, or a 2% contribution for every eligible employee, whether or not that person defers.

The catch is the commitment. An eligible employee has earned $5,000 in each of two prior years and expects $5,000 this year, With the 2% contribution, that money goes to every one of them, not only to you. With the 3% match, only the employees who defer get it. Once the plan starts, it runs the whole calendar year. Withdrawals within the first two years of participation carry a 25% additional tax, not 10%.

Roth is unsettled. The SIMPLE IRA plan page says that "a SIMPLE IRA cannot be a Roth IRA." Publication 560 (2025) says a SIMPLE IRA may be traditional or Roth under SECURE 2.0. Ask the custodian which one it offers before you plan around Roth money.

Our arithmetic: a sole proprietor at two profit levels

A sole proprietor does not get the 25% headline. The worksheet in Publication 560 (2025) starts from net profit, takes off half of self-employment tax, and then applies a rate table that turns a 25% plan rate into 20%. The table below is our arithmetic from that worksheet for two profits, using the 2026 deferral limit in place of the 2025 figure the printed worksheet uses.

Half of self-employment tax is 15.3% of 92.35% of profit, halved, the way Schedule SE works it out. Neither the pay cap nor the dollar cap binds at these profits.

The 25% headline does not reach a sole proprietor. On $140,000 of profit, 25% would be $35,000, but the worksheet gives $26,022 for the employer share. That gap is the number to plan around, whichever plan you choose. Age matters too. Someone 50 or older on the same profit reaches $58,522 in a Solo 401(k) with the standard catch-up, or $61,772 at ages 60 to 63, by the same arithmetic.

Eligibility and deductibility depend on facts this page cannot see, such as a W-2 job and your filing status. The worksheet covers one defined contribution plan. With a SEP and a Solo 401(k) together, it does not apply.

What changes when you hire

Employees change the answer for all three plans, and not in the same way.

• SEP: every eligible employee gets the same percentage of pay. The plan can be looser than the IRS minimums (age 21, three of the last five years, and $800 of pay in 2026), but not stricter.
• Solo 401(k): a qualifying employee must join the plan, and their deferrals then face nondiscrimination testing.
• SIMPLE IRA: the 2% contribution goes to every eligible employee, whether or not they defer. The 3% match goes only to employees who defer, so the cost rises with payroll either way.

Deadlines by plan

The filing dates themselves are on the tax deadlines page. If you file Schedule C yourself, our best tax software for self-employed guide compares the options.

Where to open each plan

We do not rank providers on this page. Of the 10 providers in our IRA table, Fidelity, Schwab and E*TRADE list all three plans. Betterment lists a SEP and a Solo 401(k) but no SIMPLE. Interactive Brokers and Schwab Intelligent Portfolios list a SEP and a SIMPLE, but no Solo 401(k). The other four list a SEP only. Check the plan types on the provider's own site before you open an account, because plan types and minimums change. Our product reviews are at Fidelity Brokerage, Schwab Brokerage and Betterment. A traditional or Roth IRA is a separate account with its own limit, covered on the Roth IRA contribution limits for 2026 page. For automated accounts outside a plan, the best robo advisors guide compares the options.

How we checked this

We checked the IRS 2026 cost-of-living table, which carries the 2026 limits from IR-2025-111, the SEP, SIMPLE IRA and one-participant 401(k) plan pages, and Publication 560 (2025) for the self-employed worksheet, all as of October 24, 2026. The provider counts come from our IRA table, counted on October 24, 2026. The worked examples are our arithmetic on those rules, not forecasts or recommendations. Financeradar may earn a commission from some links; it never affects rankings (how we make money).

This page is general information, not personalized financial advice, and it is not tax advice. Eligibility and deductibility depend on facts this page cannot see. Confirm plan terms with your custodian and a qualified tax professional before you act.

Cite this: Financeradar, "SEP IRA vs Solo 401(k) vs SIMPLE IRA in 2026: Limits, Deadlines and Who Each Fits", October 2026.

FAQ

What is the 2026 SEP IRA limit?

For 2026, the IRS caps a SEP contribution at the lesser of 25% of an employee's pay or $72,000. A sole proprietor's rate works out to 20% of net earnings after half of self-employment tax, not 25% of profit, so the worked example shows the real figure.

Can I open a Solo 401(k) with no employees?

Yes. The IRS says a one-participant 401(k) covers a business owner with no employees, or that owner and a spouse. If you later hire an eligible employee, the plan has to include them, and the no-testing advantage ends.

Which plan allows the most for a sole proprietor?

It depends on profit and age. At $140,000 of net profit, a Solo 401(k) with the full 2026 deferral allows $50,522 before catch-ups, compared with $26,022 for a SEP. A SIMPLE IRA at the same profit is far lower, because the deferral is $17,000 (or $18,100 with 25 or fewer employees) and the 3% match adds under $4,000. Those are our figures from the IRS worksheet, and they assume you have no other retirement plan.

Can I have a SEP and a Solo 401(k) at the same time?

Not on the worksheet used here. Publication 560 says the deduction worksheet applies only to a self-employed person with one defined contribution plan. With two plans, a tax professional should work out the deduction.

Is a SIMPLE IRA available as a Roth account?

The IRS pages do not agree. The SIMPLE plan page says a SIMPLE IRA cannot be a Roth IRA, while Publication 560 (2025) describes Roth SIMPLE IRAs under SECURE 2.0. Ask your custodian which applies before you plan around Roth money.

Do I have to file Form 5500-EZ?

If your one-participant 401(k) has $250,000 or more in assets at the end of the plan year, the IRS says it generally must file Form 5500-EZ. Plans with less can be exempt from the annual filing.