Best Retirement Plan for the Self-Employed (2026)

Who this is for

You're a freelancer, consultant, single-member LLC owner, or S-corp shareholder/employee. No HR department picks your retirement plan for you. You have access to accounts that can shelter $60k+/year, but only if you set them up.

The three-step plan

1. Step 1

   Open a Solo 401(k) if you have any consistent self-employment income

   You contribute as both employee ($23,500 in 2026) and employer (up to ~20–25% of net SE income), to a combined ceiling of $70,000 (+$7,500 catch-up at 50+). Roth Solo 401(k) is increasingly common. Plan loans up to $50k are available. The setup is more paperwork than a SEP, but the benefits dwarf it.

   Read the full guide

2. Step 2

   If you want truly zero paperwork, use a SEP-IRA

   Opens in 5 minutes at any major brokerage. Contribute up to ~20% of net SE income (~25% of W-2 wages for S-corps) to a $70,000 ceiling. No annual filing. The trade-off: no employee deferral, no Roth option, no loans. For sporadic or moderate income, the simplicity often wins.

3. Step 3

   Layer a Roth IRA on top either way

   The Solo 401(k) or SEP-IRA covers the deductible side. A backdoor Roth IRA gives you $7,000 of tax-free growth on top, with no income limit. Don't leave it on the table.

   Read the full guide

Common pitfalls

• Waiting until your accountant asks at tax-prep time. Many plans must be opened by Dec 31 of the contribution year; the contribution itself can be made up until tax filing.
• Picking a SIMPLE-IRA out of habit. Lower limits, harder to escape if income grows.
• Forgetting Form 5500-EZ once the Solo 401(k) clears $250k in assets. Late-filing penalty is steep.
• Mixing a SEP-IRA with a backdoor Roth without realising the pro-rata rule taxes the conversion.

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Frequently Asked Questions

What if I have one employee (a spouse)?

Solo 401(k) still works, spouses count as 'self-employed', not employees, and double your household limit.

What if I hire someone else?

Solo 401(k) becomes a regular 401(k) (or you switch to a SEP/SIMPLE with eligible-employee rules). Plan ahead 12 months.

Can I have both a Solo 401(k) and a day-job 401(k)?

Yes, but the $23,500 employee deferral limit is per person, not per plan. The employer side at each is separate.