What you could actually shelter this year
Employer contribution (25% of W-2)
Employee deferral — Solo 401(k) only
Room your cash flow doesn't reach yet
Solo 401(k) tax saved / yr
Costs — what's the catch?
Both plans are free to open and run at Fidelity or Schwab. Add Roth or loan features to a Solo 401(k) via a paid administrator and it runs $125–$300/yr. A short Form 5500-EZ applies only after Solo 401(k) assets pass $250K. SEP IRAs have no filing requirement.
What else does the Solo 401(k) unlock?
A Roth option for tax-free growth · loans up to $50K · +$8,000 catch-up at age 50 ($11,250 at ages 60–63) · accepts rollovers from IRAs and old 401(k)s. The SEP offers none of these. The SEP's edge: near-zero paperwork and no eligibility restrictions.
Does my business profit change the limits?
No — for an S-Corp, contribution limits are based on your W-2 salary, not business profit. Profit determines the cash you have available to fund the contribution, which is why the cash-flow slider above can change the recommendation.
2026 limits used in this calculator
Employee deferral: $24,500 · Combined employee + employer cap: $72,000 · Employer piece: 25% of W-2 wages (both plans) · Catch-up at 50+: $8,000 (must be Roth if prior-year wages exceeded $150K). Source: IRS, 2026 cost-of-living adjustments.
This tool is an illustration for planning conversations — not tax, legal, or investment advice. Your situation may differ; contact Elev8 Tax & Accounting to review your specific numbers before choosing a plan.