Small Business DeskIssue #17 · Jun 18
Solo 401(k) vs. SEP-IRA: pick once, thank yourself for a decade.
For self-employed savers, the wrong choice quietly costs five figures a year in missed contribution room.
SEP is simpler. Solo 401(k) is more generous — bigger effective contribution room at moderate profit levels, plus a Roth option most SEPs don't offer, plus loan access if you ever need it.
Unless you have employees you'd have to cover pro-rata, the Solo 401(k) is almost always the right pick. The setup takes an afternoon and pays for itself the first year.