How the Solo 401(k) Calculator Works
This calculator implements the exact IRS formulas for Solo 401(k) contributions step by step. Enter your net business profit and it automatically deducts self-employment tax (15.3% on 92.35% of net profit, with Social Security capped at the 2026 wage base of $184,500), then deducts the allowable 50% of SE tax to arrive at net SE compensation — the figure the IRS uses to calculate your employer profit-sharing maximum.
Contribution Calculator Tab
Shows the SE tax breakdown in real time, then calculates your employee elective deferral (Traditional, Roth, or a custom split) and employer profit-sharing contribution. Includes progress bars against IRS limits, a live SEP-IRA comparison, and a total-compensation breakdown.
Growth Projector Tab
Projects your balance to retirement using monthly compounding. Revenue growth is applied annually — as your business earns more, profit-sharing contributions scale up automatically. Shows 4% rule monthly income estimates at retirement.
Optimizer Tab
Charts maximum allowable contributions across 11 net profit levels from $20,000 to $300,000. Shows where the employee elective deferral dominates (lower incomes), where profit-sharing catches up (mid incomes), and where the §415 ceiling applies (high incomes).
Year-by-Year Tab
Milestone table at 5-year intervals showing annual contributions (growing with revenue), investment gains, cumulative contributions, and total balance — from your current age to retirement.
If you also have workplace retirement income, project a standard plan with the 401(k) calculator, decide between pre-tax and Roth deferrals with the Roth vs. Traditional 401(k) calculator, and set your paycheck deferral with the 401(k) contribution calculator.
2026 Solo 401(k) Contribution Limits
Employee elective deferral
$24,500
Under age 50 · Traditional or Roth
Employee deferral with catch-up
$32,500
Age 50 and older
§415 combined limit
$72,000
Employee + employer, under 50
§415 combined with catch-up
$80,000
Employee + employer, age 50+
Employer profit-sharing max rate
25%
Of net SE compensation
SS wage base (SE tax)
$184,500
Social Security portion of SE tax
The Self-Employment Tax Formula (Step-by-Step)
Self-employed individuals pay self-employment (SE) tax in place of the employee and employer shares of FICA. The IRS requires a specific calculation sequence before you can determine your maximum Solo 401(k) profit-sharing contribution:
Net profit
Start with your net Schedule C (or partnership K-1) profit — revenue minus all deductible business expenses.
SE income
Multiply net profit by 92.35% (0.9235). This is the IRS adjustment for the employer-equivalent portion of SE tax.
SE tax
Apply 15.3% to SE income (12.4% Social Security on up to $184,500 + 2.9% Medicare on all amounts). This is your annual SE tax.
Net SE compensation
Subtract 50% of SE tax from net profit (deductible on Schedule 1). This is your base for the 25% profit-sharing calculation.
Solo 401(k) vs. SEP-IRA vs. SIMPLE IRA
| Feature | Solo 401(k) | SEP-IRA | SIMPLE IRA |
|---|---|---|---|
| Eligibility | Self-employed, no FT employees (except spouse) | Self-employed, any size | Self-employed, up to 100 employees |
| 2026 employee deferral | $24,500 ($32,500 age 50+) | None | $17,000 ($21,000 age 50+) |
| Employer contribution | Up to 25% of net SE comp | Up to 25% of net SE comp | 3% of compensation (required) |
| 2026 combined max | $72,000 ($80,000 age 50+) | $72,000 | $21,000 |
| Roth option | Yes (elective deferral only) | No | No |
| Loan allowed | Yes (most plans) | No | No |
| Form 5500 required | Yes, when assets > $250,000 | No | No |
| Administration | Moderate | Simple | Simple |
| Best for income level | Below ~$230,000 | Above ~$230,000 (ties) | Very low income or with employees |
Solo 401(k) Calculation Examples
Example 1: Freelancer with $75,000 net profit
A 35-year-old freelance designer earns $75,000 net profit. SE tax: $75,000 × 0.9235 × 15.3% ≈ $10,597. Deductible half: $5,299. Net SE comp: $75,000 − $5,299 = $69,701. Max profit-sharing: $69,701 × 25% = $17,425. With full elective deferral of $24,500 + profit-sharing of $17,425, total Solo 401(k) contribution: $41,925. A SEP-IRA would be limited to $17,425.
Example 2: Consultant age 52 with $150,000 net profit
A 52-year-old consultant earns $150,000. SE income is $150,000 × 0.9235 = $138,525, which is below the Social Security wage base, so the full 15.3% applies. SE tax ≈ $21,194. Deductible half: $10,597. Net SE comp: $139,403. Max profit-sharing: 25% × $139,403 = $34,851. Elective deferral with catch-up: $32,500. Total: $32,500 + $34,851 = $67,351 — comfortably inside the $80,000 combined catch-up limit.
Example 3: High-earning sole proprietor hitting the §415 cap
A 45-year-old earns $300,000 net profit. SE income is $277,050, so the 12.4% Social Security portion stops at the $184,500 wage base while 2.9% Medicare applies to all of it: SE tax ≈ $30,912, deductible half $15,456. Net SE comp ≈ $284,544. Max profit-sharing: 25% × $284,544 =$71,136 — but the combined elective ($24,500) + profit-sharing is capped at the §415 limit of $72,000. So profit-sharing is reduced to $72,000 − $24,500 = $47,500. Total: $72,000. At this income level, Solo 401(k) and SEP-IRA produce identical maximum contributions.
Key facts
- A Solo 401(k) is for self-employed people with no full-time employees other than a spouse, and it lets you contribute as both employee (elective deferral) and employer (profit-sharing).
- The employer profit-sharing contribution is 25% of net self-employment compensation, where net SE compensation equals net profit minus the deductible half of self-employment tax.
- Self-employment tax is computed as net profit × 0.9235 × 15.3% — 12.4% Social Security up to the annual wage base plus 2.9% Medicare on all SE income.
- A Solo 401(k) requires an annual Form 5500-EZ filing only once plan assets exceed $250,000 at year-end; below that threshold, no filing is required.
Frequently Asked Questions
What is a Solo 401(k) and who qualifies?+
A Solo 401(k) — also called an Individual 401(k), Self-Employed 401(k), or i401k — is a retirement plan designed for self-employed individuals with no full-time W-2 employees other than a spouse. Eligible participants include sole proprietors, independent contractors, freelancers, consultants, single-member LLC owners, and partners in a partnership. You do not qualify if you have any common-law employees working more than 1,000 hours per year.
How much can I contribute to a Solo 401(k) in 2026?+
In 2026, a Solo 401(k) participant can contribute up to $72,000 combined ($80,000 if age 50 or older). This consists of two parts: (1) an employee elective deferral of up to $24,500 ($32,500 if 50+), and (2) an employer profit-sharing contribution of up to 25% of net self-employment compensation. Net SE compensation equals your net profit minus the deductible half of self-employment tax.
How is the Solo 401(k) profit-sharing contribution calculated?+
The profit-sharing contribution is 25% of your net self-employment compensation. Net SE compensation is calculated as: net profit − (self-employment tax × 50%). Self-employment tax itself is calculated as net profit × 0.9235 × 15.3% (with the Social Security portion capped at the $184,500 wage base in 2026). This calculation is automatically performed by our calculator when you enter your net business profit.
Can I make both employee and employer contributions to a Solo 401(k)?+
Yes. This is the key advantage of the Solo 401(k). You wear two hats as both employee and employer. As the employee, you can defer up to $24,500 (or $32,500 if 50+) regardless of your income level. As the employer, you can add up to 25% of net SE compensation. Together, these two buckets can total up to the §415 combined limit of $72,000 ($80,000 with catch-up).
Can I make Roth contributions to a Solo 401(k)?+
Yes, if your Solo 401(k) plan document allows Roth deferrals — most modern plans do. The employee elective deferral portion (up to $24,500) can be designated as Roth (after-tax) or Traditional (pre-tax), or split between both. The employer profit-sharing contribution is always pre-tax (Traditional). There is no income limit for Roth Solo 401(k) contributions, unlike the Roth IRA.
What is the difference between a Solo 401(k) and a SEP-IRA?+
Both are popular retirement plans for the self-employed, but the Solo 401(k) typically allows higher contributions at lower income levels. The SEP-IRA allows contributions of only 25% of net SE compensation — it has no employee elective deferral component. At an income of $60,000, a Solo 401(k) could allow $24,500+ in contributions while a SEP-IRA would be limited to around $11,000. At very high incomes (above ~$230,000), both plans hit the same $72,000 combined cap.
When must I establish a Solo 401(k)?+
To make contributions for a given tax year, you must establish the Solo 401(k) plan by December 31 of that tax year. However, you have until your tax filing deadline (including extensions — typically October 15 for sole proprietors) to actually make the contributions for that year. This gives self-employed individuals considerable flexibility in timing their contributions.
Does a Solo 401(k) require annual Form 5500 filing?+
Yes, but only when your plan assets exceed $250,000 at the end of the plan year. Below that threshold, no annual filing is required. Once assets exceed $250,000, you must file Form 5500-EZ (or Form 5500-SF) annually with the IRS. This is a relatively simple informational return and does not typically require professional preparation.
Can my spouse participate in my Solo 401(k)?+
Yes. A spouse who earns income from the business — for example, as a co-owner or employee — can participate in the Solo 401(k). This effectively doubles the contribution capacity, allowing each spouse to make separate employee elective deferrals up to their respective limits. This is one of the most powerful wealth-building features of the Solo 401(k) for business-owning couples.
What investment options does a Solo 401(k) allow?+
Unlike workplace 401(k) plans that restrict you to a preset fund menu, Solo 401(k) plans can allow a broad range of investments depending on the plan provider. Most custodians (Fidelity, Vanguard, Charles Schwab, TD Ameritrade) allow stocks, bonds, ETFs, and mutual funds. Self-directed Solo 401(k) plans offered by specialty providers can also hold real estate, private equity, precious metals, and other alternative assets.
Estimates & Assumptions
- SE tax is calculated using 2026 rates: 12.4% Social Security on SE income up to $184,500 and 2.9% Medicare on all SE income. The Additional Medicare Tax of 0.9% (for incomes above $200,000 single / $250,000 married) is not modelled.
- The profit-sharing contribution uses the 25% rate applied to net SE compensation (net profit minus deductible half of SE tax). For S-Corp owners, the calculation differs — S-Corp shareholders contribute as employees based on W-2 wages, not net profit. This calculator applies to sole proprietors and single-member LLCs taxed as sole proprietors.
- Contribution limits and all calculations use 2026 IRS figures. Limits are indexed to inflation and typically increase each year; the IRS announces the following year's figures each autumn.
- Growth projections use monthly compounding at the specified annual return rate. Revenue growth is applied annually, proportionally scaling all subsequent contributions. Actual results depend on variable investment returns and changes in business income.
- State income tax deductibility of Solo 401(k) contributions varies by state and is not modelled. Federal tax savings from the traditional deduction are qualitatively described but not quantified in this calculator.
This calculator is for educational and estimation purposes only. Solo 401(k) contribution rules are complex and depend on your business entity type, income sources, and other plan participation. S-Corp owners, partners in partnerships, and those with multiple retirement plans should consult a CPA or financial advisor for precise contribution calculations.