Solo 401(k) contribution calculator

Employee plus employer — more room than a SEP IRA.

A Solo 401(k) lets you contribute as both the employee and the business. That double contribution is why it usually beats a SEP IRA at the same profit.

Enter your net profit and whether you are 50 or older. The calculator shows your employee deferral, employer share, and total max.

Why a Solo 401(k) beats a SEP IRA for most solos

A SEP IRA lets you contribute only as the employer — up to 20% of net earnings. A Solo 401(k) lets you contribute as both the employee and the employer. That double role is the whole advantage: at the same profit, a Solo 401(k) almost always lets you stash more, because the employee deferral (up to $23,500 in 2025) sits on top of the business profit-sharing share.

The calculator adds the two pieces and caps the total at the annual limit, so you see your true max at your profit level.

The two moving parts

The employee side is a flat deferral from your pay — up to $23,500 for 2025, plus a $7,500 catch-up once you turn 50. The employer side is profit-sharing: up to 20% of your net earnings from self-employment. "Net earnings" is your profit minus half your self-employment tax, because that half is deductible. The calculator applies that adjustment, so the employer figure is the IRS-correct one rather than a rough 20%-of-profit guess.

The cap that quietly matters

The combined total cannot exceed the annual additions cap — $70,000 for 2025. At high profits you hit it, and the calculator shows the headroom under it. Below that, your limit is simply employee deferral plus 20% of net earnings. Either way the number is the maximum you can shelter; you can always contribute less.

Who should open one

If you have meaningful self-employment profit and want to save aggressively for retirement, a Solo 401(k) is usually the better vehicle than a SEP IRA or a plain IRA, precisely because of the employee deferral. The trade-off is setup and paperwork: it needs a plan document and, once assets pass $250,000, a Form 5500-EZ filing. For most solos the extra contribution room is worth it. The retirement savings calculator compares the Solo 401(k) against a SEP IRA side by side.

Tax now vs tax later

Contributions are deductible, lowering this year's taxable income; growth is tax-deferred; withdrawals in retirement are taxed as ordinary income. That is the standard pre-tax deal. If you expect to be in a lower bracket later, the deduction is worth taking. The contribution also reduces your adjusted gross income, which can help with other phase-outs.

Don't forget the deadline

You can open a Solo 401(k) and make the employer contribution up to your business's tax-filing deadline (including extensions), but the employee deferral must be made by December 31. Set it up before year-end if you want this year's deduction — waiting until you file in April is too late for the employee portion.