Self Employed? Understanding Your Retirement Savings Options

If you’re self-employed, you likely have big goals for the future of your business. But what about your own future?

Retirement savings for freelancers, sole proprietors, gig workers, and small business owners can look different than it would under traditional employment. You don’t have access to an employer-sponsored account, so you need to take your retirement savings plans into your own hands.

This guide will help you understand your options.

Retirement Account Options for the Self Employed

There are several types of retirement accounts available for those working for themselves. The right plan for you will depend on your unique financial and business needs.

For complete information about these retirement account types, visit the IRS website

Solo 401(k)

A solo 401(k), also called an individual 401(k) or one-participant 401(k), is a retirement account available for self-employed individuals and their spouses.

Solo 401(k)s typically have higher contribution limits than individual retirement accounts (IRAs), allow for tax-deductible contributions, and are available for your spouse as well (if they receive income from your business). You can choose to make traditional or Roth contributions to a solo 401(k), and you also have the option to take a loan from the account when needed.

Solo 401(k)s are often a favorable option for retirement savings, since account holders can contribute as both the employer and employee, making employer contributions of up to 25% of your total compensation.

This account type is also easy to set up, requiring minimal paperwork. Solo 401(k)s are typically exempt from ERISA compliance testing.

Quick Facts

  • Main Benefit: Higher contribution limits than IRA, long-term tax-deferred  compounding
  • 2026 Contribution Limit: $24,500 (Under 50); catch-up contributions of $8,000 (age 50-59, 64+) and $11,250 (age 60-63) permitted
  • Income Limit: None
  • Tax Benefits: Contributions can be tax deductible, optional tax-free Roth growth, options for personal and business tax reduction

Start building your future

By opening an ePlan Services Solo 401(k), you can save more and reduce your taxable income by over $20,000 per year. Reach out to our team to set up your account in 24 hours.

Traditional or Roth IRA

A traditional or Roth IRA is another popular option for self-employed individuals, especially those who are earlier in their careers. While the contribution limit is lower than a 401(k), these accounts are usually easy to set up and generally do not require  plan documents or annual filings. Keep in mind that Roth IRAs have an income cap.

Quick Facts

  • Main Benefit: Few administrative requirements
  • 2026 Contribution Limit: $7,500 ($8,600 for age 50 and older)
  • Income Limit: $153,000 (single) or $242,000 (married) (Roth only)
  • Tax Benefits: Tax-deferred growth (traditional), tax-free withdrawals in retirement (Roth)

SEP IRA

A Simplified Employee Pension (SEP) IRA is a retirement account available to both self-employed individuals and business owners with employees. These accounts have features of an IRA and 401(k), having similarly high contribution limits as a 401(k). You can also take penalty-free withdrawals for qualified education expenses, first-time home purchases, and health insurance during periods of unemployment.

However, with a SEP IRA, you are only able to contribute as the employer. You can also only make traditional contributions, rather than traditional and Roth. This means you will need to pay taxes on withdrawals when you reach retirement. Catch-up contributions are also not available for SEP IRAs.

Quick Facts

  • Main Benefit: Flexible distribution rules, high contribution limits
  • 2026 Contribution Limit: 25% of compensation up to$72,000
  • Income Limit: $360,000
  • Tax Benefits: Contributions can be tax deductible, tax-deferred investment growth

SIMPLE IRA

Savings Incentive Match Plan for Employees (SIMPLE) IRAs are another account option for self-employed individuals and businesses with fewer than 100 employees. Since the plan is designed for small businesses, it has a less complex plan structure and fewer administrative requirements (you don’t need to file annual reports with the IRS).

You can also contribute as both the employer and the employee. However, employer contributions are mandatory within this plan type. SIMPLE IRAs have lower contribution limits than 401(k) plans, and, while some providers may offer a Roth option, SIMPLE IRAs are typically pre-tax only.

Quick Facts

  • Main Benefit: Easy documentation and fewer administrative requirements
  • 2026 Contribution Limit: $17,000 (under 50); $21,000 (age 50-59, 64+); $22,250 (age 60-63)
  • Income Limit: None
  • Tax Benefits: Contributions can be tax deductible

Tips for Getting Started

Not sure where to begin? Here are a few tips for helping you select the best self-employed retirement account.

Understand your retirement goals

Knowing when you want to retire and how much money you expect to save can help you choose the right retirement account for you. Details like contribution limits, the ability to make catch-up contributions, and having a Roth option can affect your retirement account balance in the future.  

Consider your business finances

Every business is different, and self-employment income may change over time (or even throughout the year!). Thinking about whether your income is likely to be steady, unpredictable, or grow quickly over time, for example, may affect your retirement savings decisions.

Work with a financial advisor

Retirement accounts can be complex, and it’s tricky to know which plan type is right for you and your financial situation. A financial advisor can look at your complete self-employment picture, as well as your unique retirement goals, and help you choose a plan. They can also help you with any administrative requirements once you open your plan.

Start Saving Today

As you grow your business, it’s time to consider how to grow your retirement savings. With an ePlan Services Solo 401(k), you can invest in your future without the complicated setup and admin.

Our team is here to help you start your Solo 401(k) plan in 24 hours. We make it easy, so you can focus on your business.

This content is for educational purposes only, is not intended to provide specific legal or financial advice, and should not be used as a substitute for the legal advice of a qualified attorney or financial professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.
Set up your Solo 401(k) today!