Top Retirement Plans for the Self-Employed

If you’re self-employed, you’ve probably already figured out that you don’t get the traditional perks of a company 401(k) with a match. But here’s the kicker—retirement plans for the self-employed can actually be even better. With the right plan, you can stash away more money than most employees ever could, setting yourself up for a retirement that’s not just comfortable but truly rewarding. Let’s dive into the options that can help you make the most of your hard-earned dollars.

Solo 401(k): The Powerhouse Plan

Meet James, a freelance consultant who turned his side hustle into a full-time gig. When he left corporate America, he worried about losing his cushy 401(k) plan—until he discovered the Solo 401(k). This plan allows him to contribute as both an employee and an employer, giving him the ability to save up to $70,000 in 2025, plus an extra $11,250 in catch-up contributions if he’s between 60 and 63.

What makes it great?

• You can choose between a traditional (pre-tax) or Roth (after-tax) account.

• You can invest in nearly anything, from stocks to real estate.

• If you don’t have employees (other than a spouse), it’s an unbeatable way to save big.

Best for: One-person businesses or those with a spouse working in the business. Great for high-income earners and side gig enthusiasts.

SEP IRA: Simplicity with a Big Impact

Imagine Lisa, a graphic designer who occasionally hires subcontractors but doesn’t have full-time employees. She needs a plan that’s simple to manage but still allows her to put away a hefty amount for retirement. Enter the SEP IRA.

With a SEP IRA, Lisa’s business can contribute up to 25% of her earnings, maxing out at $70,000 in 2025. The best part? It doesn’t stop her from contributing to a separate Roth IRA if she wants to.

What makes it great?

• Easy to set up and manage.

• No annual IRS filing requirements.

• Contributions are flexible—perfect for businesses with fluctuating income.

Best for: High-earning solopreneurs and business owners without full-time employees.

SIMPLE IRA: A Retirement Plan That Grows with You

Now, consider Mark, who owns a small marketing agency with a handful of employees. He wants to offer a retirement benefit, but he’s not ready for the administrative headache of a full 401(k). The SIMPLE IRA fits the bill.

Mark’s employees can defer up to $16,500 in 2025, while he, as the employer, must contribute either:

• A match of up to 3% of employee salaries, or

• A flat 2% of each eligible employee’s salary (capped at $350,000 in compensation).

What makes it great?

• Easier and cheaper to run than a traditional 401(k).

• Employees are 100% vested immediately—whatever they get is theirs.

• Recent SECURE 2.0 updates allow small businesses to contribute more.

Best for: Small business owners who want to provide a solid retirement option without the complexity of a 401(k).

Going Beyond: Defined Benefit Plans

If you’re raking in serious cash and looking for a way to maximize tax-deferred savings, a defined benefit plan might be your golden ticket. Take Robert, a self-employed doctor who earns well into six figures. By setting up a defined benefit plan, he can potentially contribute over $200,000 a year toward retirement—far more than any other plan allows.

The catch? These plans are complex and require ongoing actuarial calculations. But for high-earning, stable business owners, the tax benefits can outweigh the costs.

Best for: High-income professionals with consistent earnings who want to supercharge their retirement savings.

The Bottom Line

Being self-employed means you have to take charge of your own retirement planning, but it also means you have more flexibility and opportunity to save in ways that traditional employees can’t. Whether you’re a solopreneur, a small business owner, or a high-earning consultant, there’s a plan that fits your needs.

So, which retirement plan sounds like the right fit for you? The sooner you start, the brighter your future will be.

Ready to secure your retirement? Contact a Texas CPA today to tailor the perfect retirement plan for your small business!