For those steering their own ship, retirement savings options stretch from decent to downright stellar — often enabling you to stash away far more than the typical employer-sponsored plan permits. Entrepreneurs and freelancers alike can secure a financially glowing retirement by picking the right plan tailor-made to their solo ventures.
Self-employed folks aren’t boxed into one choice: they can opt for defined contribution schemes like the solo 401(k), SEP IRA, or SIMPLE IRA. On the flip side, there are also defined benefit plans that deserve a spot on your radar.
Below, we break down the nitty-gritty on top-notch retirement plans for self-starters: how much you’re allowed to tuck aside, and which framework might jive best with your business style.
Retirement Vehicles Suited for the Self-Employed
One snag of flying solo in business is missing out on employer perks — including the chance to contribute pre-tax or post-tax bucks via retirement accounts.
A solo 401(k) shines here by letting you pour money into practically any asset class you fancy. Hunt for a brokerage that offers free solo 401(k) setups — firms like Fidelity or Charles Schwab often waive fees, keeping your costs lean.
Come 2025, you can chip in up to $23,500 as the employee and add an employer contribution that maxes out at 25% of your net business earnings — combining for a hefty $70,000 yearly limit. Those aged between 50-59 or 64+ can slip in an extra $7,500 catch-up, while folks from 60 to 63 get a whopping $11,250 boost.
This surpasses the typical corporate 401(k) caps by a comfortable margin.
Ideal candidates: This plan suits solo operators or married couples running a business together. Side hustlers and high-earners may find this especially advantageous.
SEP IRA: Simplicity Meets Generosity
The SEP IRA rolls out the red carpet for employer contributions, including for self-employed individuals who double as their own workforce.
The business can contribute the smaller figure between 25% of net earnings or the IRS maximum. Widely accessible through numerous brokers, it ensures all eligible employees receive identical contribution percentages.
Who’s this for? High-income solo entrepreneurs, especially those flying solo without additional employees.
SIMPLE IRA: A Laid-Back Approach to Retirement Savings
If you run a small setup — up to 100 employees earning $5,000+ annually — the SIMPLE IRA is a breezy, straightforward option to kick-start retirement contributions without wrestling with complicated 401(k) rules.
Employees can funnel up to $16,500 in 2025 from their paychecks, with a $3,500 catch-up for those over 50. New regulations courtesy of the SECURE 2.0 Act bump contributions to $17,600 for companies with 25 or fewer staff, alongside a $3,850 catch-up for eligible employees.
Employers chip in, choosing to either:
- Match employee contributions up to 3% of salary
- Or contribute a flat 2% of salary, capped at $350,000 in 2025
Contributions vest immediately — meaning the funds are yours from the get-go.
Best fit: Small businesses with multiple employees seeking a simpler, cost-effective retirement plan.
Mid-Article Fact Snapshot
According to IRS 2025 data, the maximum contributions to self-employed 401(k) plans stand at $70,000, while SIMPLE IRAs top out around $17,600 for small employers. The catch-up contributions vary by age group, with increments designed to encourage extra saving as retirement nears.
Beyond Defined Contributions: Exploring Defined Benefit Plans
While the trio above dominate popularity charts, high earners with stable incomes might want to peek at defined benefit plans. These allow substantially heftier, tax-deferred contributions, sometimes exceeding $200,000 annually — based on age, income, and business longevity.
Dan Sudit, a Crewe Advisors partner, notes these plans are “worth mulling over if your self-employed income is robust.”
Be warned, though: setup and upkeep prove pricier and more complex. Yet, if you’re channeling serious cash into your future, these costs might be a worthwhile trade-off.
Sudit adds, “Depending on whether contributions are steady or lump sums, defined benefit plans can turbocharge retirement savings beyond standard qualified plans.”
For most, however, defined benefit schemes might be overkill — their value hinges heavily on your unique earnings and financial blueprint.
Finding Your Perfect Match: Which Plan Reigns Supreme?
Picking the right plan boils down to your unique business and personal circumstances. For solo entrepreneurs (and spouses), the solo 401(k) often steals the spotlight. It offers all the bells and whistles of a traditional employer 401(k), plus some serious extras.
According to Sudit, “I lean towards the solo 401(k) because it blends the best perks of every other deferral method. It offers maximal flexibility paired with the chance to cherry-pick features tailored to your goals.”
He elaborates: “From maximizing both employee and employer contributions to offering Roth options and unmatched flexibility, solo 401(k)s empower self-employed earners to supercharge their retirement nest eggs.”
Solo 401(k): The Power Player
- Double-dip contributions: employee plus employer
- Access to a wide range of investment options
- Roth and traditional tax treatment choices
This means you can elevate your retirement stash above what’s possible under a SEP IRA, for example.
Why Solo 401(k) Often Outshines SEP IRA
Beyond basic contribution limits, the solo 401(k) has a subtle edge: it allows you to contribute up to 100% of your income — capped at the employee limit — unlike the SEP IRA’s flat 25% rule.
In 2025, that means you can tuck away the first $23,500 of your earnings into your solo 401(k), lowering your taxable income smartly. Meanwhile, the SEP IRA forces you to pull in substantially higher income to reach comparable contribution heights.
Plus, solo 401(k)s let you squeeze in that 25% employer contribution on top of your employee deferral — boosting your total potential stash even when income is modest.
These nuances are pivotal when deciding which plan aligns best with your earnings and business setup.
Don’t Forget IRAs: Still a Viable Ally
Participation in self-employed retirement plans like SEP or SIMPLE IRAs doesn’t disqualify you from also using an IRA.
You can max out contributions across other vehicles and still contribute up to $7,000 (plus a $1,000 catch-up if aged 50+) to your personal IRA in 2025.
IRAs come with the bonus of tax-deferred growth and open doors to powerful options like the Roth IRA — widely regarded as a stellar retirement savings tool.
Final Thoughts: Tailoring Your Retirement Roadmap
Ultimately, nailing down the right retirement plan hinges on your business size, income, and future aspirations. While the solo 401(k) often claims the crown for single-person ventures, it’s a no-go for businesses with employees beyond yourself and a spouse.
“Thoughtful planning is key,” Sudit advises. “Jumping in without weighing your unique situation might leave you underprepared when retirement knocks.”