Retirement & Planning

Individual 401(k) Contribution Comparison

Use this calculator to determine your maximum Individual 401(k) contribution as compared to three other possible plan options.

Inputs

Net self-employment income

Employee elective limit

Estimates only. Adjust any value to recalculate instantly.

Results

Solo 401(k) advantage $23,500 more than a SEP-IRA at $120,000 income

SEP-IRA maximum $24,000

Solo 401(k) maximum $47,500

Employee deferral $23,500

Extra you can save $23,500

Maximum contribution

Employer/profit-sharing $24k
Employee deferral (solo only) $24k

Both plans allow an employer contribution of about 20% of net self-employment income. The solo 401(k) adds the employee elective deferral on top, so at modest incomes it lets you contribute substantially more than a SEP-IRA.

How the individual 401(k) contribution comparison calculator works

It estimates the employer contribution (about 20% of net self-employment income) available to both a SEP-IRA and a solo 401(k), then adds the employee elective deferral the solo 401(k) allows on top.

Worked example

Worked example: with net self-employment income of $120,000 and employee elective limit of $23,500, the individual 401(k) contribution comparison shows solo 401(k) advantage of $23,500.

SEP-IRA maximum: $24,000
Solo 401(k) maximum: $47,500
Employee deferral: $23,500
Extra you can save: $23,500

The formula

SEP max ≈ 20% of net SE income. Solo 401(k) max ≈ that employer amount + the employee elective deferral, up to the annual limit.

Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.

Frequently asked

Questions about the individual 401(k) contribution comparison

Solo 401(k) or SEP-IRA?

At the same income, a solo 401(k) usually allows a larger contribution because it adds an employee deferral on top of the employer portion a SEP also permits.

When might a SEP-IRA be better?

A SEP is simpler to administer and allows last-minute setup. For high earners near the overall limit the two converge, so the solo 401(k)’s edge is largest at moderate incomes.

Is this an exact contribution figure?

It is a close estimate using the standard ~20% factor for self-employed employer contributions. Your exact limit depends on net earnings and self-employment tax — confirm with a tax professional.

Is the Individual 401(k) Contribution Comparison free to use?

Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.

Related calculators

401(k) Calculator A 401(k) can be one of your best tools for creating a secure retirement. Use this calculator to see why this is a retirement savings plan you cannot afford to pass up. 401(k) Contribution Effects on Your Paycheck Calculator Use this calculator to see how increasing your contributions to a 401(k) plan can affect your paycheck as well as your retirement. 401(k) Savings with Profit Sharing Use this calculator to show how a 401(k) with profit sharing plan can help you save for retirement.. 401(k) Spend It or Save It Calculator There are several ways to manage your 401(k) when you leave an employer. Making the wrong decision can cost you thousands of dollars both in taxes and lost earnings. 403(b) Savings Calculator If you are an employee of a non-profit tax-exempt organization, a 403(b) can be one of your best tools for creating a secure retirement. 457 Plan Contribution Effects on Your Paycheck Calculator Use this calculator to see how increasing your contributions to a 457 plan can affect your paycheck as well as your retirement.