Working-alone guide

Retirement plan types for self-employed people

Tax-year note: Tax information on this page applies to the 2026 tax year (returns filed in 2027), from IRS pages checked in November 2026. Figures and dates are labelled with their tax year where they appear. Check current IRS pages before you rely on them.

An employer plan with automatic payroll deductions makes saving easy. Working for yourself removes that structure, but not the options. The IRS points out that self-employed people have many of the same options to save on a tax-deferred basis as employees in company plans. This guide describes the plan types on the IRS page and how they differ in shape. It deliberately prints no contribution limits: the IRS page itself shows older years' figures, and limits change annually, so check the IRS cost-of-living adjustment page for the tax year you are saving for.

Simplified employee pension (SEP)

The IRS describes a SEP as allowing contributions of a percentage of net earnings from self-employment, up to an annual dollar limit. Its setup, as the IRS lists it, is light:

1. Complete Form 5305-SEP or an IRS-approved prototype SEP plan offered by financial institutions.
2. Open a SEP-IRA through a bank or other financial institution.

The IRS says you can set up a SEP for a year as late as the due date, including extensions, of your income tax return for that year. That late deadline is one reason SEPs are common among new self-employed people.

One-participant 401(k)

A 401(k) for a business with no employees other than a spouse is sometimes called a solo 401(k), individual 401(k) or uni-401(k). The IRS says it is generally the same as other 401(k) plans, but because there are no other employees, it is exempt from discrimination testing.

The IRS describes two contribution layers: salary deferrals up to an annual limit, with an additional catch-up amount for people 50 or older, made pre-tax or as designated Roth contributions; plus an additional contribution based on net earnings from self-employment, with a combined annual limit. It adds that a plan can be tailored to allow loans and hardship distributions.

A 401(k) usually involves more paperwork than a SEP, and providers' fees and features vary.

SIMPLE IRA plan

The IRS says that with a SIMPLE IRA plan you can put net earnings from self-employment into the plan up to an annual limit, with a catch-up for people 50 or older, plus either a 2% fixed contribution or a 3% matching contribution.

Setup involves Form 5305-SIMPLE, Form 5304-SIMPLE, or an approved prototype, and opening a SIMPLE IRA. The IRS notes a timing rule: you can set up a SIMPLE IRA plan any time from January 1 through October 1, and if you became self-employed after October 1, as soon as administratively feasible after the business starts.

Other defined contribution plans

The IRS lists profit-sharing plans, which let you decide annually how much to contribute up to a limit, and money purchase plans, which require a fixed percentage every year under the plan's formula.

Defined benefit plans

A traditional pension promises a stated annual benefit at retirement, or a benefit defined by a cash balance formula. The IRS notes that contributions are calculated by an actuary based on the benefit and other factors, such as age and expected returns. These plans can allow large contributions but carry ongoing costs and obligations.

Keogh: an old name

The IRS explains that retirement plans for self-employed people were formerly called Keogh plans, a term now seldom used.

How to compare, without a calculator here

Questions worth answering for each plan you consider:

• Setup deadline. When must the plan exist for the tax year you care about?
• Contribution flexibility. Can you contribute less in a lean year?
• Paperwork. Are there annual filings once the balance grows?
• Roth option. Is one available?
• Employees. Would hiring later change the rules?
• Cost. What does the provider charge?

This directory does not recommend plans or providers. For the 2026 tax year, read the IRS cost-of-living adjustment page for current dollar limits and the IRS self-employed tax center for how contributions affect your return.

Cash flow first

A retirement contribution only helps if the business can sustain it. Build your startup sheet and a tax reserve first; see the estimated tax calendar. Then decide what you can save regularly.