Self-Employed and Behind on Retirement? The Solo 401(k) Door May Be Bigger Than an IRA's

If you are self-employed and are only making individual retirement account (IRA) contributions, you may be missing out on the chance to save more money for your future.

Solo 401(k) plans are available for many solopreneurs and side hustlers, and they have much higher contribution limits than IRAs. You can put up to $72,000 into a solo 401(k) in 2026, and that doesn’t even include catch-up contributions for people age 50 and older.

Why a solo 401(k) can offer much more room than an IRA

A solo 401(k) plan is a regular 401(k) plan for a business owner with no employees. This unique setup lets you contribute to a solo 401(k) plan as an employer and an employee. The employee side works like any regular 401(k), but as a solo business owner, you can make additional employer contributions.

If you include the employer and employee contributions, it’s possible to contribute up to $72,000 in 2026 to a solo 401(k) plan before catch-up contributions. However, the employer limit is influenced by your net self-employment income.

In 2026, you can contribute up to $24,500 as an employee (though the limit increases if you’re older than 50 due to catch-up contributions). You can also contribute up to 25% of compensation as the employer, after Social Security and Medicare taxes.

Who qualifies and how the contribution math works

This arrangement works for business owners with no employees, but a spouse who works for the business can also participate. However, the plan changes if you hire an employee. In that case, elective deferrals will be subject to non-discrimination testing, as outlined by the IRS.

Anyone who is 50 years or older can make an $8,000 catch-up contribution in 2026, and that number goes up to $11,250 if you are 60 to 63 years old. The plan must specifically permit super catch-up contributions for you to make them. It’s a good idea to verify any calculations with a plan provider or a tax professional before contributing.

Who does a solo 401(k) make sense for?

A solo 401(k) can be a great resource for people who have high self-employment income and want to exceed IRA limits.

However, you can’t contribute those high amounts to both your solo 401(k) and an employer-sponsored plan if you are already working at a full-time job. The employee contribution limit of $24,500 applies to both accounts. If you contribute $20,000 to your corporate job’s 401(k), you can only contribute an additional $4,500 to your solo 401(k) from the employee side. You can still contribute additional money to a solo 401(k) as an employer.

IRAs can be more simple to use than solo 401(k) plans. You can also consider a SEP IRA, which can be more complicated but has higher contribution limits than a traditional IRA since it allows large employer contributions. However, many people gravitate toward a solo 401(k) due to its employee-deferral component. SEP IRAs only permit employer profit-sharing contributions.