Contribution ceilings are not promises. The amount an owner can actually contribute depends on plan terms, compensation, entity and tax status, employee eligibility, and contributions to other plans.

2026 limits at a glance

PlanKey 2026 figureOften considered by
One-participant 401(k)$24,500 employee deferral; $72,000 base total limitOwner-only businesses seeking deferral flexibility
SEP IRAUp to $72,000, subject to compensation formulaOwners favoring employer-funded simplicity
SIMPLE IRA$17,000 employee deferral before eligible catch-upSmall employers willing to make required contributions

Age-50 catch-up rules and enhanced catch-ups for ages 60–63 may apply. Limits are only one part of plan selection.

One-participant 401(k)

A one-participant or “Solo” 401(k) covers a business owner with no common-law employees other than a spouse. The owner may contribute in employee and employer capacities, subject to the governing limits. This structure can help owners reach a target contribution with less compensation than an employer-only formula, but plan administration, deadlines, and Form 5500-EZ filing requirements can apply.

SEP IRA

A SEP is funded by employer contributions. It can be relatively straightforward, but a business generally must use a uniform contribution percentage for eligible employees. For self-employed individuals, the contribution calculation is not simply 25% of Schedule C net profit; the IRS requires a special computation that accounts for deductible self-employment tax and the contribution itself.

SIMPLE IRA

A SIMPLE IRA allows employee salary-reduction contributions and requires an employer contribution under the plan rules. It may fit a small team that wants a lighter structure than a traditional 401(k), but it has lower employee deferral limits and specific notice, timing, and eligibility rules.

Five questions that usually narrow the choice

  1. Do you employ anyone other than yourself and a spouse?
  2. How much eligible compensation or self-employment income do you expect?
  3. Are you age 50 or older, or age 60–63, and eligible for catch-up contributions?
  4. Do you want employee salary deferrals, employer-only contributions, or both?
  5. Can you support plan administration, notices, filings, and employee contribution obligations?

Primary source and professional review

Confirm annual limits in the IRS cost-of-living adjustment releaseand review the one-participant 401(k) guidance. A plan administrator or qualified tax professional should calculate your personal maximum and confirm employee coverage before contributions are made.