A Solo 401(k) allows both an employee deferral and an employer profit-sharing contribution — which is why its total room typically exceeds a SEP IRA’s at the same income, especially at lower earnings levels.
How it works
The employee deferral is a direct dollar choice up to the annual limit. The employer contribution follows the same self-employed 20%-of-net-earnings math as this site’s SEP IRA calculator. The two are added together and capped at the combined §415(c) ceiling.
What this does not include
This calculator only covers a Solo 401(k) with no eligible employees other than the owner (and spouse) — a plan covering other employees has additional testing and contribution requirements this calculator doesn’t model.
How to use this calculator
- Enter net self-employment earnings and the employee deferral you plan to make.
- Enter the current year’s combined contribution ceiling.
Frequently asked questions
Why is Solo 401(k) room usually bigger than a SEP IRA’s?
Because it adds an employee deferral on top of the same employer contribution a SEP IRA allows — at lower income levels, that deferral can be a large share of total room.
Can I max out both an employer 401(k) and a Solo 401(k)?
The employee deferral limit applies across all plans combined, not per plan — maxing an employer plan’s deferral leaves no employee-deferral room for a Solo 401(k) the same year, though employer contributions to the Solo 401(k) are still separately available.
What if my business has employees?
A Solo 401(k) is specifically for an owner with no other eligible employees — a business with staff generally needs a standard 401(k) plan with nondiscrimination testing instead.
