Self-employed individuals have a variety of retirement plan options that they can choose from to help save money on taxes and get a secure future. Here’s a look at the best retirement options for self-employed individuals, including their benefits, downsides, how much you can contribute, and when they are best to use. Here’s a summary of the most common retirement plans for self-employed people:

Solo 401k (Self-Employed 401k)

This plan might be a good choice if you have a high income and want to save a lot. The Solo 401K plan is a good option for those who do not have full-time employees except for their spouse. If you are 50 years or older, you can contribute up to $30,500 as an employee in 2025; otherwise, up to $23,000. The limit for the company contribution is up to 25% of your net self-employment income. If you are 50 or older, the total contribution is $76,500 or otherwise $69,00. A disadvantage to this plan is that it requires you to file Form 5500 with the IRS if your account is worth over $250,000.

SEP IRA (Simplified Employee Pension)

This is a good option if you want an easy and flexible way to save, with high contribution limits. Any self-employed person or small business owner can take advantage of this plan. The contribution amount for 2025 is up to 25% of your net self-employment earnings, but not more than $69,000. The SEP IRA plan is easy to set up and manage. Employees can be included, but you will need to contribute the same amount for each employee. Also, if you are 50 or older there you do not get to make any extra contribution to this plan.

SIMPLE IRA (Savings Incentive Plan for Employees)

This plan might be a good choice for self-employed individuals looking for a plan at a lower cost. In 2025, you can contribute up to $16,000 or $19,500 if you’re 50 or older. One requirement of this plan is to either match 3% of your employees’ contribution or add 2% of your income. This plan is much easier to manage than a 401(k) and is a great plan for small businesses. The drawback to this plan is that the savings limit is lower compared to SEP or Solo 401(k), and you must make required employer contributions.

Traditional or Roth IRA

This plan allows you to save extra money if you already have other retirement plans. The contribution amount in 2025 is $7,000 or $8,000 if you are 50 or older. A Roth IRA is very flexible, easy to set up, and gives you a variety of investment options. However, this plan may not be available to everyone due to income limits. Another drawback to this plan is that and has very low contribution limits.

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Written by: Kerian Stewart