Should I use a Solo 401(k) or a SEP-IRA?

For most one-person businesses with no employees, the Solo 401(k) wins because it adds an employee deferral on top of the employer contribution. A SEP-IRA only allows the employer piece — up to about 20% of net self-employment income — so to hit the $70,000 cap in 2025 you'd need roughly $350,000 of profit. A Solo 401(k) lets you contribute the full $23,500 employee deferral first, then layer the profit-sharing on top, so you can save far more at modest income. Solo 401(k)s also allow Roth contributions and loans, which SEPs don't. The SEP's edge is simplicity: it has no annual Form 5500 filing and can be opened and funded right up to your tax deadline. If you have employees beyond a spouse, the math changes — a SEP requires equal percentages for everyone. Compare both in wealthserene.com/for/self-employed.