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SEP · SIMPLE · Solo 401(k)

SEP vs SIMPLE vs Solo 401(k) Calculator

Three plans, one profit, and no single order that holds across the whole range. The solo 401(k) allows the most at almost every income — but a SIMPLE edges ahead below about $12,000, and a SEP overtakes the SIMPLE above about $125,000. This page runs all three and tells you where you are.

Prepared for the 2026 tax year.

One number decides most of it. A deferral is not tested against the 25% of compensation that limits an employer contribution. The 401(k) has a $24,500 one, a SIMPLE has $17,000, and a SEP has none at all.

Schedule C line 31, before any retirement contribution.
Catch-ups differ by plan: the 401(k) pays $8,000 at 50 and $11,250 at 60 to 63; a SIMPLE pays $4,000 and $5,250; a SEP pays none at any age.
The two sit on different bases — 2% of all compensation against 3% of what you defer — so the lower percentage often pays more.
Leave at zero if none. This is the field that can change the answer completely: the deferral limit is per person, not per plan.

Enter your profit and your age. The page works out all three plans on the same figures, ranks them, and tells you which crossover point you are near — because the best plan changes twice across the income range.

Best plan at your profit —
Solo 401(k) $0
SIMPLE IRA $0
SEP IRA $0
SEP against SIMPLE — Below roughly $125,000 the SIMPLE leads the SEP; above it, the SEP leads. The exact point moves with your age.
Deferral room left $0 Out of $24,500 across all employer plans. Used up, the 401(k) loses its advantage.

The full worksheet for the widest plan. The Solo 401(k) Calculator shows all twenty-one steps of the Publication 560 worksheet and which of the four limits binds at your income.

Or the contribution that competes with all of them. The Self-Employed Health Insurance Calculator works out the premium deduction, which comes off profit before any of these plans is measured.

Earning too much for a $72,000 ceiling to matter? The Defined Benefit Calculator covers the one plan here that is not limited by it.

Where these figures come from

All three worksheets
IRS Publication 560, Chapter 5 — Deduction Worksheet for Self-Employed, steps 1 to 21
401(k) ceiling
$72,000 ·
SIMPLE limits
$17,000 reduction, $4,000 catch-up ·
SIMPLE employer
3% match or 2% nonelective · IRC §408(p)(2)(A)(iii), §408(p)(2)(B)
Deferral is per person
$24,500 across all plans ·
Verified
4 October 2026
How this is worked out

All three run on the same Publication 560 worksheet. The only difference between them is whether an elective deferral is in the calculation, and how large it is.

Solo 401(k)
The worksheet with a $24,500 deferral and the largest catch-up
Pub. 560 (2025), steps 9 to 19
A deferral is limited by compensation, not by a percentage of it, which is why the 401(k) allows more than the other two at almost every income.
SIMPLE IRA
A $17,000 deferral, plus a 3% match on what is deferred or 2% of all compensation
IRC §408(p)(2)(A)(ii), (iii) and §408(p)(2)(B)
The two employer options are measured on different bases. On a full deferral the 2% pays more, because 2% of all compensation exceeds 3% of $17,000.
SEP IRA
The worksheet with no deferral at all
Pub. 560 (2025), steps 9 to 21 skipped
Every dollar is an employer contribution, so the reduced 25% rate applies to all of it. That is why a SEP is the smallest of the three at a modest profit — and why it overtakes a SIMPLE once the SIMPLE's deferral has stopped growing.
Compensation, for a self-employed person
Net profit − one-half of self-employment tax
Pub. 560 (2025), steps 1 to 3

The formulas are shown as the authority defines them, in its own terms — the arithmetic is not copyrightable and the rates are public-domain US government material. What these lines cannot tell you is where your figures came from; that is what the table above is for.

The order is not fixed — it changes twice

Most comparisons state one winner and stop. Measured across the income range at 55, the ranking moves twice:

Below about $12,000 a SIMPLE can edge ahead of a solo 401(k), because at that profit the 401(k)'s $24,500 deferral is limited by earning enough to make it, and the SIMPLE's 2% nonelective is measured on compensation the 401(k) does not touch.

From about $12,000 to about $125,000 the solo 401(k) leads, and leads clearly — on $80,000 it allows about $47,400 against roughly $22,300 for a SIMPLE and $14,870 for a SEP.

Above about $125,000 the solo 401(k) still leads, but the SEP overtakes the SIMPLE. A SIMPLE's deferral is capped at $17,000 and its employer part is a small percentage; a SEP is a flat percentage of a growing number.

Why the deferral decides almost everything

An employer contribution is limited to 25% of compensation — reduced by Publication 560 to 20% of net earnings. A deferral is not tested that way at all. It is limited by whether you earned it. So the plan with the largest deferral wins, and the plan with no deferral loses, and that single difference explains the ranking at almost every point.

It also explains the exception. At a very low profit nobody can use a large deferral because there is not enough compensation to defer from. The advantage disappears, and the smaller plan's employer contribution is what is left to compare.

Frequently asked questions

Which plan is best for a self-employed person?

A solo 401(k), at almost every income — but not every income, and not always overall. It allows the most because its $24,500 deferral never passes through the 25% test that limits an employer contribution. Two exceptions are worth knowing: below roughly $12,000 of profit a SIMPLE can edge ahead, and if you have already deferred the full amount into a plan at a job, the 401(k) loses that advantage entirely and a SEP becomes competitive.

Does a SEP ever beat a SIMPLE?

Yes, above roughly $125,000 of profit. A SIMPLE's deferral is capped at $17,000 and its employer contribution is a small percentage, so the total flattens out. A SEP is a flat percentage of compensation and keeps rising toward $72,000. Below the crossover the SIMPLE leads — it has a deferral and a SEP has none — and above it the SEP leads and stays ahead. Which side you are on is the useful question, and the calculator answers it with your own figure.

Can I open two of these plans?

You can maintain more than one, but not to get two sets of limits. The contribution limits are applied across the plans as though they were a single plan for the same business. The salary reduction limit is $24,500 across all employer plans, so deferring into one reduces what fits in another. A second account does not create a second ceiling.

I already defer into a 401(k) at my job. Does that change this?

Completely, and that is why the field exists. The elective deferral limit is per person, not per plan. Deferred the full $24,500 at work and your own plan has no deferral room left — the 401(k)'s entire advantage, and the SIMPLE's larger half. A SEP has no deferral to lose, so with the allowance spent a SEP becomes competitive at every income rather than only above $125,000.

The tax year is over. Which can I still open?

Only a SEP. It can be established up to the filing deadline including extensions and still apply to the closed year. A SIMPLE must be set up between 1 January and 1 October of the year it covers. A solo 401(k) has to exist before 31 December. If you are reading this in the new year, two of the three are already gone for the year that just ended.

Which costs least to run?

A SEP, then a SIMPLE. Neither requires an annual filing. A one-participant 401(k) must file Form 5500-EZ once it holds $250,000 or more at the end of a year. A SIMPLE needs no discrimination testing and no annual report; a SEP needs neither either. If the contribution figures are close for you, the administration is the tiebreaker — and that is where the smaller plans earn their place.

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