Two reasons:
1️⃣ Massive tax savings. Retirement contributions lower your taxable income now.
2️⃣ You’re your own boss — no one’s funding your future except you. If you’re not saving, no one else is doing it for you.

A good plan slashes taxes and builds wealth. Win-win.

SEP IRA: Easy to set up, flexible, and works great for one-person businesses without employees. You can put in up to 25% of your net self-employment income, up to $69,000 for 2024.

Solo 401(k): More flexible — you can contribute both as employee and employer. That means you can often stash away more at lower income levels. You can defer up to $23,000 (or $30,500 if you’re 50+), plus the 25% employer piece.

So if you want maximum savings — Solo 401(k) usually beats SEP.

High earners who want to supercharge savings. A cash balance plan is a defined benefit plan — think of it like a mini-pension. You can layer it on top of a Solo 401(k) or SEP. Depending on your age and income, you could shelter well over $100K–$300K per year. 

They’re more complex and need an actuary, but huge for dentists, consultants, or high-profit solo firms wanting to turbocharge retirement tax savings.

Yes — and many top earners do. The Solo 401(k) gets you flexibility and employee/employer contributions. The cash balance plan layers on top with even bigger allowed contributions. This combo is the gold standard for pushing income into retirement while cutting taxes hard.

The SEP IRA is hands-down the easiest — one form, no annual filings, very little admin. The Solo 401(k) has a bit more paperwork (like a Form 5500 once your plan balance hits $250K). The cash balance plan is the most complex — annual filings, actuarial certifications — but for the right profit level, it’s worth every penny.

Game changer. With a SEP IRA, you must contribute the same percentage for eligible employees as you do for yourself — so it can get expensive fast.

With a Solo 401(k), you can’t have any employees other than a spouse. Cash balance plans can work with employees but bring in more legal requirements and cost. If you have a team, you need a custom plan design — don’t DIY this.

It comes down to:

✅ How much profit you have.
✅ Whether you have employees.
✅ How much you want to save.
✅ Whether you want easy or max tax savings.

I run the numbers for clients every year to make sure they’re using the plan that keeps the most cash in their pocket, not the IRS’s.

A SEP IRA can be opened and funded by your tax filing deadline (including extensions). A Solo 401(k) generally must be opened by December 31, but you can fund the employer piece by the tax deadline.

A cash balance plan must be in place by year-end, and you must make required contributions by the tax deadline too.

Late planning = lost savings. Don’t wait.