SEP-IRA vs Solo 401k

bigtruckguy3500

Joined: Nov 11, 2007

Posts: 11,266

User Profile Ignore User Stop Ignoring

How long do you want to ignore this user?

24 hours One week Permanently Cancel

I'm looking to pick up some 1099 work, and my understanding is this will allow me to contribute more money towards a retirement account than I already do (currently Roth IRA and TSP/401k) via either a SEP-IRA or a Solo 401k.

I'm trying to decide which is better. Have been reading a bit here and there on them. Seems both have some advantages. I believe a SEP-IRA is easier to set up and run, but a Solo 401k allows Roth contributions easier?

I doubt I'll max the contributions for the next couple years, but as time goes on I might end up with majority of my income being 1099.

I currently invest with E trade, if that makes a difference.

Anyone with experience, thoughts?

AggieInHouston

Joined: Feb 6, 2026

Posts: 61

User Profile

Private Message

Ignore User Stop Ignoring

How long do you want to ignore this user?

24 hours One week Permanently Cancel

1:58p, 6/15/26

AG

Assuming you have no employees other than possibly a spouse, I'd generally look at a Solo 401(k) before a SEP IRA.

As you mentioned, a SEP is simpler, but contributions are generally limited to the employer side, which for self-employed income is roughly 20% of net profit after the self-employment tax adjustment. A Solo 401(k) can allow employee deferrals plus the employer/profit-sharing contribution, so it can be beneficial on lower or moderate 1099 income.

One caveat: the employee deferral limit is shared across plans, so any TSP/401(k) deferrals you already make reduce what you could defer into the Solo 401(k).

3

aggiez03

Joined: Mar 31, 2003

Posts: 14,306

User Profile

Private Message

Ignore User Stop Ignoring

How long do you want to ignore this user?

24 hours One week Permanently Cancel

8:19p, 6/15/26

AG

Fidelity solo 401K is free to setup and you can setup a regular 401k and a Roth 401k at the same time.

Set up an LLC and pay yourself a salary and your company can contribute 25% of gross pay to your 401k which is a business deduction off your profit. Then you can contribute up to 23k or over 30k if over 50 for your contribution. Less if you have another 401k like mentioned above.

1

1 edit