Solo 401(k) vs SEP IRA vs Roth IRA: Which Retirement Account Wins For Freelancers

Nearly 47% of people say they probably wouldn’t save for retirement if they didn’t have access to it from their employer. However, when you work for yourself, you are your own employer. No one sets up a 401(k) for you or matches your contributions, so the first move is choosing and creating your own account. If you're a freelancer deciding between a Solo 401(k), SEP IRA, or Roth IRA, here's the short version: for most freelancers, a Roth IRA is the simplest place to start, a SEP IRA lets you contribute much more as your income grows, and a Solo 401(k) offers the highest savings ceiling plus a Roth option, but it comes with the most paperwork.

This guide breaks down how the three accounts differ on contribution limits, taxes, and setup, so you can pick the one that fits your income and goals.

New to working for yourself? It helps to start with our guide for the 1099 contractor, and with the basics of an individual retirement account (IRA).

At a glance: Solo 401(k) vs SEP IRA vs Roth IRA

At a glance, a Roth IRA is the easiest to open with the most flexibility, a SEP IRA offers a high contribution limit with very little paperwork, and a Solo 401(k) offers the highest ceiling and a loan option.

Here's how the three compare:

What each account is, in plain terms

• A Solo 401(k) is a one-participant 401(k) for the self-employed
• A SEP IRA is an employer-funded IRA for the self-employed and small businesses
• A Roth IRA is an after-tax personal IRA almost anyone with earned income can open
   

Roth IRA

A Roth IRA is a personal retirement account you fund with after-tax dollars, which means your money has tax-free growth potential and tax-free withdrawals in retirement. Anyone with earned income can open one, as long as their income falls under the IRS limits. It offers the most flexibility out of the three and is a common starting point for freelancers.

SEP IRA

A SEP IRA, short for Simplified Employee Pension, is a retirement account funded entirely by employer contributions, and when you're self-employed, you're the employer. It's popular with freelancers and small business owners because it pairs a high contribution limit with almost no paperwork.

Solo 401(k)

A Solo 401(k), also called a one-participant or individual 401(k), is a 401(k) built for a business owner with no employees other than a spouse. It lets you contribute as both the employee and employer, which is what gives it the highest ceiling of the three. The trade-off is more setup and ongoing paperwork.

2026 contribution limits, and why a Solo 401(k) often wins on ceiling

In 2026 you can contribute:

• Up to $7,500 to a Roth IRA (or $8,600 if you're 50 or older)
• Up to $72,000 to a SEP IRA
• Up to $72,000 to a Solo 401(k) (or $80,000 if you're 50 or older)
   

For a Solo 401(k), it has two parts: an employee deferral of up to $24,500, plus an employer contribution, for a combined cap of $72,000 (under 50) or $80,000 (50 or older). A special higher catch-up applies for ages 60 to 63.

A SEP only lets you contribute as the employer, which caps you at about 20% of your net self-employment earnings. A Solo 401(k) lets you add a flat employee deferral on top of that employer piece.

At lower and middle incomes, that deferral can let you contribute far more in a Solo 401(k) than in a SEP at the same income. At higher incomes, the two converge at the $72,000 cap.

These limits can adjust year to year, so it's worth checking the current figures on the IRS cost-of-living adjustment page before you finalize a contribution.

How taxes work, and which accounts offer a Roth option

A Roth IRA is always funded with after-tax dollars, while a SEP IRA and Solo 401(k) are usually funded with pre-tax dollars. Both the Solo 401(k) and, more recently, the SEP IRA offer a Roth version.

With a pre-tax account like a SEP IRA or a traditional Solo 401(k), you generally get a tax deduction now and pay income tax when you withdraw the money in retirement. With an after-tax Roth account, you skip the deduction today, but your money has tax-free growth potential and tax-free withdrawals later. A Solo 401(k) commonly offers a Roth option inside the plan, so you can choose pre-tax, Roth, or a mix.

The SEP IRA is the newcomer here. The SECURE 2.0 Act made Roth SEP contributions possible, but not every provider offers them yet. It’s best to check with your provider beforehand.

Income limits, employees, and eligibility

A Roth IRA has income limits, while a SEP IRA and a Solo 401(k) have no income limit to participate. The SEP IRA and Solo 401(k) also come with employee rules that a Roth IRA doesn't have.

For 2026, the Roth IRA income phase-out runs from:

• $153,000 to $168,000 for single filers and heads of household
• $242,000 to $252,000 for married couples filing jointly
   

Above those ranges, you won’t be able to contribute to a Roth IRA directly. A SEP IRA and a Solo 401(k) have no income limit, though you need earned self-employment income to fund them.

The employee rules are where those two accounts really diverge. A SEP IRA requires you to contribute the same percentage of compensation for every eligible employee, so if you hire, your costs scale with your team. A Solo 401(k) is only for owners with no employees other than a spouse, so adding a non-spouse employee takes it off the table entirely.

Setup, loans, and getting to your money

A SEP IRA is the easiest to set up, a Solo 401(k) takes the most paperwork but allows loans, and a Roth IRA lets you withdraw your contributions anytime.

On setup, a SEP IRA is the simplest, often just a single IRS form to establish. A Roth IRA opens like any other IRA. A Solo 401(k) takes more work to set up, and once total plan assets reach $250,000, you may have to file a Form 5500-EZ each year, per the IRS rules for one-participant 401(k) plans. Make sure to keep an eye on the differences between when you have to establish each plan and when you have to fund it, since the deadlines can vary.

On access, a Solo 401(k) can allow loans if the plan permits, while a SEP IRA and a Roth IRA do not. On early withdrawals, pulling pre-tax money out of a SEP IRA or Solo 401(k) before age 59½ generally triggers a 10% penalty plus taxes. A Roth IRA is more forgiving and lets you withdraw the contributions you put in (though not the earnings) anytime, without taxes or penalty.

Can you have more than one of these accounts?

Yes! You can pair a SEP IRA or a Solo 401(k) with a Roth IRA, as long as you stay within each account's contribution limits.

A common setup for freelancers is to use a SEP IRA or Solo 401(k) for the high ceiling and a Roth IRA for tax-free flexibility. The Roth IRA limit is separate from the SEP IRA or Solo 401(k) limit, so contributing to one doesn't reduce what you can put in the other. Just remember that the Roth income limits still apply, and your total contributions across all your IRAs count toward a single IRA limit.

For the bigger picture, see our guides to IRA vs. 401(k) and how to save for retirement.

Which account is right for you?

A Roth IRA fits freelancers who are starting out or earning less, a SEP IRA fits those who want a high limit with minimal paperwork, and a Solo 401(k) fits those who want the highest ceiling and a Roth option and don't mind the paperwork.

Best for starting out: the Roth IRA

If you're early in your freelance career, earning a moderate income, or you simply want maximum flexibility, a Roth IRA is hard to beat. It's simple to open and has tax-free growth potential.

Best for a high limit with little paperwork: the SEP IRA

If your self-employment income has grown and you want to contribute well beyond the IRA limit without much paperwork, a SEP IRA is a strong middle ground. It's quick to open, easy to maintain, and scales if your team grows.

Best for the highest ceiling: the Solo 401(k)

If you want to contribute as much as possible, want a Roth option inside the plan, or are considering a loan feature, a Solo 401(k) offers the most. Just be ready for more setup and filling a Form 5500-EZ if your balance grows. It's only an option if you have no employees other than a spouse.

Not sure which IRA fits? Acorns Later offers Traditional, Roth, and SEP IRAs and recommends the right one based on a few questions, so you can open and start funding it in minutes. Acorns doesn't offer a Solo 401(k). If that's the route you want, you'll need a provider that specializes in them. For many freelancers, though, a SEP or Roth IRA covers the need with far less hassle.

Choosing between a Solo 401(k), a SEP IRA, and a Roth IRA comes down to how much you want to contribute, how you want your money taxed, and how much paperwork you're willing to take on. The good news is that any of the three beats putting it off.

When you're ready, you can invest for retirement with Acorns Later. Want to go deeper on the SEP IRAs before deciding? Read our article on What is a SEP IRA?.

Frequently asked questions

What's the difference between a Solo 401(k), SEP IRA, and Roth IRA?

A Solo 401(k) is a one-participant 401(k) for the self-employed, a SEP IRA is an employer-funded IRA for the self-employed and small businesses, and a Roth IRA is an after-tax personal account anyone with earned income can open. The Solo 401(k) has the highest contribution limit, the SEP IRA is the simplest high-limit option, and the Roth IRA offers the most flexibility.

Which retirement account is best for a freelancer?

For most freelancers, a Roth IRA is the best place to start because it's simple, flexible, and has the potential for tax-free growth. As your income grows, a SEP IRA lets you contribute more with little paperwork, and a Solo 401(k) offers the highest ceiling if you don't mind the extra paperwork.

How much can I contribute to each account in 2026?

In 2026 you can contribute up to $7,500 to a Roth IRA, or $8,600 if you're 50 or older. A SEP IRA allows up to 25% of compensation, capped at $72,000. A Solo 401(k) allows up to $72,000 combined, or $80,000 if you're 50 or older.

Can I have a SEP IRA and a Roth IRA at the same time?

Yes. You can contribute to a SEP IRA (or a Solo 401(k)) and a Roth IRA in the same year, as long as you stay within each account's limit and your income qualifies you for the Roth. Many freelancers pair a high-limit account with a Roth IRA for added flexibility.

Does Acorns offer a SEP IRA or a Solo 401(k)?

Acorns Later offers Traditional, Roth, and SEP IRAs and recommends the right one based on a few questions. Acorns does not offer a Solo 401(k), so you'd need a specialized provider for that account type.