RETIREMENT ACCOUNTS FOR SELF-EMPLOYED INDIVIDUALS

How to build your retirement savings when you're your own boss!

Being self-employed comes with a lot of freedom—but it also means you don’t have an employer-sponsored 401(k) plan. That doesn’t mean you can’t save for retirement in a smart, tax-advantaged way. In fact, there are several powerful retirement accounts designed specifically for freelancers, business owners, and independent contractors.

In this blog post, we’ll break down the top retirement account options for self-employed individuals, how they work, and how to choose the best one for you.

Why Retirement Accounts Matter

Just because you’re not clocking in at a traditional 9–5 doesn’t mean retirement isn’t on the horizon. Saving early and consistently gives you the power of long-term compounding and financial freedom later in life.

Plus, self-employed retirement accounts come with major tax advantages that can lower your taxable income today while building wealth for tomorrow.

Top Retirement Accounts for the Self-Employed

1.SEP IRA (Simplified Employee Pension)

What it is: A flexible, tax-deferred retirement account that allows high contribution limits.

Contribution Limit: Up to 25% of your net self-employment income, up to $70,000 (for 2025).

Best For: Solo entrepreneurs and business owners who want to make large contributions and lower taxable income.

Advantages;

• Easy to set up

• High contribution limit

• Contributions are tax-deductible

Disadvantages

• You can't contribute as an employee, only the business can contribute for you

2.Solo 401(k)

What it is: A powerful retirement plan for self-employed individuals with no employees (except possibly a spouse).

Contribution Limit:

• Employee deferral: Up to $23,500 (or $31,000 if 50+)

• Employer contribution: Up to 25% of your net income

• Total max (2024): $70,000 or $77,500 if over 50

  
  

Best For: High-income earners who want to max out contributions and possibly take a loan from their plan.

Advantages:

• Highest total contribution potential

• Roth option available

• Allows 401(k) loans

  
  

Disadvantages:

•  More complex setup and annual filing required after $250K in assets

3.SIMPLE IRA

What it is: A powerful retirement plan for self-employed individuals with no employees (except possibly a spouse).

Contribution Limit:

• Employee deferral: Up to $23,500 (or $31,000 if 50+)

• Employer contribution: Up to 25% of your net income

• Total max (2024): $70,000 or $77,500 if over 50

  
  

Best For: High-income earners who want to max out contributions and possibly take a loan from their plan.

Advantages:

• Highest total contribution potential

• Roth option available

• Allows 401(k) loans

  
  

Disadvantages:

•  More complex setup and annual filing required after $250K in assets

4.Traditional or ROTH IRA

What it is: Individual retirement accounts anyone can open, regardless of employment.

Contribution Limit: $7,000/year ($8,000 if over 50)

Best For: Everyone—especially if you’re just getting started or also want tax diversification.

Advantages:

•  Roth IRA grows tax-free

•  No employer needed

•  Great starting point

  
  

Disadvantages:

•  Low contribution limit

•  Income limits apply to Roth IRA

Tips for Choosing the Right Account

1. Consider Your Income--- If you have high self-employment income, a Solo 401(k) or SEP IRA can help you contribute more and lower your taxes.

2. Think About Employees--- If you plan to hire, consider how employer contributions or plan requirements will impact your costs.

3. Start with an IRA--- If you’re new to self-employment or just want to get started today, a Roth IRA is a perfect first step.

4. Don’t Wait--- The earlier you start saving—even a small amount—the more time your money has to grow. Compound interest is your best friend.

   
   
   
   

Final Thoughts

Being self-employed puts your financial future squarely in your own hands. While that can feel overwhelming, it also gives you full control over how and when you save for retirement.

Whether you go with a Solo 401(k), SEP IRA, or just start small with a Roth IRA, the key is to start now. Future you will thank you.

Want help setting up your self-employed retirement plan? Reach out and let’s create a strategy that works for your goals and income!