If you are a freelancer, independent contractor, or small business owner with no employees, you have access to retirement plans that allow for massive contributions. The two heavyweights are the SEP IRA and the Solo 401(k).
The SEP IRA: Simplicity First
The Simplified Employee Pension (SEP) IRA is incredibly easy to set up. It functions much like a Traditional IRA, but with much higher contribution limits.
The Catch: Your contributions are strictly limited to roughly 20-25% of your net self-employment income (up to $72,000 in 2026). If your side hustle only makes $10,000, your SEP IRA contribution limit is around $2,000.
The Solo 401(k): Maximum Contributions
The Solo 401(k) is a bit more complex to open and requires some paperwork, but it offers a massive advantage for those with moderate self-employment income.
Because you act as both the "employee" and the "employer," you can make two types of contributions:
- Employee Deferral: You can contribute 100% of your earnings up to $23,500 (in 2026).
- Employer Profit Sharing: You can add another 20-25% of your net income on top of that.
The Verdict
If you want zero administrative hassle and make a very high income, a SEP IRA is fantastic. If you want to maximize your retirement savings on a moderate side-hustle income (e.g., trying to save $15,000 out of $20,000 earned), the Solo 401(k) is almost always the better choice.