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SEP IRA vs Solo 401(k) vs cash balance plan

What a SEP IRA, a Solo 401(k) and a cash balance plan each let you put away this year, at your age and income. Nothing you type leaves this page.

A single-member LLC counts as a sole proprietor, and a multi-member LLC as a partnership, unless it chose to be taxed as a corporation.

Schedule C line 31, before retirement contributions

At the end of 2026

Counting this one

Most you could put away for 2026

  • SEP IRA$57,000

    Employer contributions only

  • Solo 401(k)$80,000

    Salary deferral plus employer profit sharing

  • Cash balance plan and Solo 401(k)$239,000

    $201,000 cash balance, $37,000 Solo 401(k)

See what each saves in tax

Reading the comparison

The grey part of each bar is a defined contribution plan: a SEP IRA or Solo 401(k), whose limit is the same at every age apart from the catch-up. The green part is what a cash balance plan adds on top, which grows with age because the plan is funding a benefit at retirement.

When both plans are used, the Solo 401(k) keeps the full salary deferral but its employer profit sharing is generally held to 6% of pay. That is why the Solo 401(k) part of the combined bar is smaller than the Solo 401(k) on its own.

More room is only useful if you can fund it. A cash balance plan comes with a minimum contribution each year, and suits people who expect steady income for several years.

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