Shelter self-employment income with a solo 401(k) or SEP-IRA
The right plan chosen for your entity and income, opened before the deadline that applies to it, employee and employer contributions computed correctly off net self-employment earnings, contributions made and documented, and the annual filing requirement calendared.
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Who it's for
Freelancers, consultants, and single-member LLC owners in the U.S. with roughly $50,000–$300,000 of self-employment income, no non-spouse employees (a spouse is allowed), and no retirement plan covering this business yet. Also fits S-corp owners who pay themselves W-2 wages and want to run the setup themselves instead of paying an advisor.
About this playbook
This guide walks a self-employed person through sheltering business income in a solo 401(k) or SEP-IRA, the two retirement plans that let you keep more of what you earn while cutting this year's tax bill. It starts with the eligibility checks that kill most plans (a non-spouse employee on the payroll, a missed establishment deadline), then computes the contribution you can actually make off net self-employment earnings, where nearly everyone overstates the number. You will compare the two plan types against your own figures, open the account at a no-cost broker, and fund both the employee and employer contributions by the deadlines that apply to your plan. It covers the S-corp version of the math, the Form 5500-EZ filing that appears once plan assets pass $250,000, and the annual calendar that keeps you compliant for years. It does not cover investment selection, Roth conversion strategy, or state tax specifics.
What you'll do, step by stepFree preview
Only a sample is open: 3 of 18 steps can be read in full. The rest unlock when you buy.
Phase 1: Take stock of your situation
4 stepsPhase 2: Run the numbers and choose the plan
4 stepsPhase 3: Open the plan
3 stepsPhase 4: Fund the plan with correct amounts
4 stepsPhase 5: Stay compliant and calendar the future
3 steps
Details
What you need first
U.S. self-employment income reported on Schedule C (sole proprietor or single-member LLC taxed as a sole proprietorship) or W-2 wages from your own S-corp; your most recent filed tax return and current year-to-date profit numbers; a Social Security number or EIN; no non-spouse employees; and cash available to fund the contributions you intend to deduct.
