What is the Solo 401(k) contribution limit for 2026?

The 2026 Solo 401(k) total contribution limit is $70,000. This combines the employee deferral ($23,500, or $34,750 if aged 60–63) and the employer contribution (up to 25% of net self-employment income or W-2 compensation). The combined total cannot exceed $70,000 or 100% of compensation, whichever is less.

How do I calculate the employer contribution for a Solo 401(k)?

For a Schedule C filer, the employer contribution is 20% of net self-employment income after the SE tax deduction (not 25%). Net SE income = net profit minus half of self-employment tax. Multiply net SE income by 20% to get the employer contribution. S-corp owners use 25% of their W-2 salary paid by the corporation.

Can I contribute to both a Solo 401(k) and a SEP-IRA in the same year?

You cannot contribute to both a Solo 401(k) and a SEP-IRA for the same business in the same year. However, if you have multiple separate businesses, you may have a SEP-IRA for one and a Solo 401(k) for another. The total across all plans is still subject to the $70,000 annual additions limit.

What is the Solo 401(k) contribution deadline for 2026?

Employee deferrals must be elected by December 31, 2026 and deposited as soon as practicable. Employer contributions can be made up to the tax filing deadline including extensions — October 15, 2027 for most sole proprietors. The plan itself must be established by December 31 of the year you want to begin contributions.

Does a Solo 401(k) reduce self-employment tax?

No. Solo 401(k) contributions reduce federal and state income tax but do not reduce self-employment tax (SE tax), which is calculated on net profit before retirement deductions. The SE tax deduction (half of SE tax) does reduce the base on which your employer contribution is calculated.

Can my spouse contribute to my Solo 401(k)?

Yes, if your spouse performs services for the business and receives compensation, they can participate in the same Solo 401(k) plan. Each spouse has their own $23,500 employee deferral limit and employer contribution based on their own compensation. A spousal Solo 401(k) can effectively double the household's contribution.

Self-Employed 401(k) Calculator 2026 — Solo 401(k) Contribution Limits

The 2026 Solo 401(k) contribution limit is $70,000 in total — combining your employee deferral (up to $23,500) and employer contribution (up to 25% of compensation). Self-employed workers under age 50 earning $120,000 in net profit can contribute up to approximately $46,000. The calculation is more complex than most retirement accounts because the employer contribution is based on net self-employment income after the SE tax deduction.

How the Solo 401(k) Contribution Is Calculated

A Solo 401(k) has two separate contribution buckets:

1. Employee deferral — as the employee of your own business, you can defer up to 100% of compensation up to $23,500 (2026 limit). Age 50+ can defer up to $31,000; age 60–63 up to $34,750.

2. Employer contribution — as the employer, you can contribute up to 25% of compensation. For Schedule C filers, this is calculated as 20% of net self-employment income (the math resolves to 20% rather than 25% because of how net SE income is defined).

Total limit: The combined amount cannot exceed $70,000 (2026) or 100% of compensation.

Step-by-Step Calculation for Schedule C Filers

Step 1: Determine net profit from Schedule C
Step 2: Calculate SE tax = net profit × 0.9235 × 15.3%
Step 3: SE tax deduction = SE tax ÷ 2
Step 4: Net SE income = net profit − SE tax deduction
Step 5: Employer contribution = net SE income × 20%
Step 6: Employee deferral = up to $23,500 (or catch-up limit)
Step 7: Total contribution = employer contribution + employee deferral (cap at $70,000)

Worked Example: Freelance Designer, $120,000 Net Profit

Step	Calculation	Amount
Net profit (Schedule C)	—	$120,000
SE tax	$120,000 × 0.9235 × 15.3%	$16,945
SE tax deduction	$16,945 ÷ 2	$8,473
Net SE income	$120,000 − $8,473	$111,527
Employer contribution (20%)	$111,527 × 20%	$22,305
Employee deferral (under 50)	—	$23,500
Total Solo 401(k) contribution	$22,305 + $23,500	$45,805
Remaining room to $70,000 cap	—	$24,195 (already used)

Total federal income tax deduction: $45,805 (plus the $8,473 SE tax deduction = $54,278 total deductions from $120,000 income).

2026 Solo 401(k) Contribution Limits by Net Profit

Net Profit	Employer Contrib (20%)	Employee Deferral	Total (under 50)
$30,000	$5,644	$23,500	$29,144
$60,000	$11,288	$23,500	$34,788
$100,000	$18,814	$23,500	$42,314
$120,000	$22,305	$23,500	$45,805
$160,000	$29,695	$23,500	$53,195
$200,000	$37,187	$23,500	$60,687
$230,000+	$46,500	$23,500	$70,000 (cap)

Net profit figures. The $70,000 combined cap is reached at approximately $230,000+ net profit.

Age 60–63 Super Catch-Up: Significant Advantage

Workers aged 60, 61, 62, or 63 can use the SECURE 2.0 super catch-up contribution. This raises the employee deferral to $34,750 instead of $23,500 — an extra $11,250 per year.

Age	Employee Deferral	Employer (at $120K profit)	Total
Under 50	$23,500	$22,305	$45,805
50–59	$31,000	$22,305	$53,305
60–63	$34,750	$22,305	$57,055
64+	$31,000	$22,305	$53,305

S-Corp Owner Calculation

If you operate as an S-corporation, the math is simpler:

Employee deferral: up to $23,500 (or catch-up) — based on your W-2 wages from the S-corp
Employer contribution: up to 25% of your W-2 wages
The S-corp itself deducts the employer contribution as a business expense

Example: S-corp pays you a $100,000 W-2 salary.

Employee deferral: $23,500
Employer contribution: $100,000 × 25% = $25,000
Total: $48,500

Solo 401(k) vs. SEP-IRA: Which Contributes More?

Net Profit	SEP-IRA Max (20%)	Solo 401(k) Max	Solo 401(k) Advantage
$50,000	$9,407	$32,907	+$23,500
$100,000	$18,814	$42,314	+$23,500
$150,000	$28,220	$51,720	+$23,500
$230,000+	$46,500	$70,000	+$23,500

The Solo 401(k) always wins at lower income levels because of the employee deferral. At very high incomes (above ~$345,000 net profit), the SEP-IRA and Solo 401(k) converge at the same total since both cap at $70,000.

Setting Up a Solo 401(k)

The plan must be established by December 31 of the year you want to begin contributions
A Solo 401(k) requires an EIN — you cannot use your Social Security Number
Plans with over $250,000 in assets must file Form 5500-EZ annually
Many major brokerages offer free Solo 401(k) accounts: Fidelity, Vanguard, Schwab, E*TRADE

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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