Here is what nobody told you when you went out on your own: the moment you became self-employed, retirement planning became entirely your problem.
No HR department. No automatic 401(k) enrollment. No employer match. No one setting aside money on your behalf while you focus on the business. If you don’t set it up, it doesn’t happen — and the default for too many women entrepreneurs is to tell themselves they’ll figure it out later, when the business is more stable.
The business is never quite stable enough. Later becomes never. And in the meantime, the IRS collects taxes on income that could have been sheltered.
Here is what the data says about where that leads: women retire with approximately 39% less in savings than men do. Women are more likely than men — 50% versus 47% — to have no retirement savings at all. The gap is worst for self-employed women, who don’t have access to the payroll-deducted, employer-matched systems that at least nudge salaried workers toward saving.
The good news is that the accounts available to self-employed women are genuinely excellent. The limits are high, the tax benefits are real, and getting started takes less than an hour. Here is exactly what your options are in 2026.
The accounts available to self-employed women
SEP IRA — the simplest place to start
2026 contribution limit: Up to $72,000, or 25% of net self-employment compensation, whichever is lower
Tax treatment: Pre-tax contributions, taxed at withdrawal in retirement
Best for: Solo founders who want a simple setup and meaningful contribution room
Filing requirement: None (unless you hire employees)
A SEP — Simplified Employee Pension — is exactly what the name promises: the simplest path to meaningful retirement contributions for self-employed people. You open one with any major brokerage (Fidelity, Vanguard, Schwab), make a contribution, and deduct it from your taxable income. That’s the whole thing.
The contribution ceiling of $72,000 sounds enormous — and it is — but the 25% rule limits how much most self-employed people can actually contribute. The way the IRS calculates self-employment income for SEP IRA purposes (after deducting half of your self-employment tax) means the effective contribution rate is closer to 20% of your gross net profit. At $100,000 in net self-employment income, you can contribute roughly $18,587. At $200,000, roughly $37,174. You need net self-employment income of about $360,000 to reach the $72,000 cap.
Every dollar you contribute comes directly off your taxable income. If you’re in the 22% federal tax bracket, a $10,000 SEP IRA contribution saves you $2,200 in federal taxes this year, plus state income taxes if applicable. The IRS is effectively co-investing in your retirement.
If you have employees, be aware: a SEP IRA requires you to contribute the same percentage of compensation for all eligible employees as you contribute for yourself. For solo operators, this doesn’t matter. If you have W-2 employees, this distinction changes the math significantly — talk to a CPA before opening one.
Solo 401(k) — best for higher contributions at mid-range income
2026 contribution limit: Up to $72,000 ($80,000 if age 50+; $83,250 for ages 60–63 under SECURE 2.0)
Employee deferral component: Up to $24,500 (under 50), $32,500 (age 50+)
Tax treatment: Pre-tax traditional contributions, or Roth option if the plan permits
Best for: Solo founders who want to maximize contributions and are comfortable with slightly more paperwork
Filing requirement: Annual Form 5500-EZ once plan assets exceed $250,000
A Solo 401(k) — also called an Individual 401(k) or Self-Employed 401(k) — is the account that lets you wear two hats at once: employer and employee. As the employee, you can defer up to $24,500 of your income into the account in 2026. As the employer, you can contribute up to 25% of your net self-employment compensation on top of that.
This two-layer structure is why the Solo 401(k) outperforms the SEP IRA at lower income levels. At $60,000 in net self-employment income, a SEP IRA would allow roughly $11,152. A Solo 401(k) would allow that same employer contribution plus up to $24,500 in employee deferral — potentially reaching $35,000+ total, depending on your income. The Solo 401(k) wins by a wide margin for founders in the $50,000–$150,000 income range who want to shelter as much as possible.
The tradeoffs are real. Setting up a Solo 401(k) requires more paperwork than a SEP IRA. If your plan assets exceed $250,000, you must file Form 5500-EZ with the IRS annually. And Solo 401(k) plans are only available to businesses with no full-time employees other than the owner and their spouse.
Many Solo 401(k) plans also offer a Roth option — meaning you can make after-tax employee deferrals that grow and withdraw tax-free. If you expect to be in a higher tax bracket in retirement than you are today, the Roth Solo 401(k) option is worth modeling.
Roth IRA — tax-free growth, income limits apply
2026 contribution limit: $7,500 (under age 50), $8,600 (age 50+)
Tax treatment: After-tax contributions; tax-free growth and qualified withdrawals
Best for: Founders earlier in their career, or those who want tax diversification
Income limit: Contributions begin phasing out above $150,000 for single filers in 2026
A Roth IRA is the mirror image of a SEP IRA or traditional Solo 401(k). You pay taxes on the money before it goes in — no immediate deduction — but everything inside the account grows tax-free and comes out tax-free in retirement. If your income is on the lower end today but you expect it to rise significantly, a Roth IRA locks in your current tax rate on those contributions.
The contribution limits are lower than a SEP IRA or Solo 401(k), but a Roth IRA is entirely separate — you can fund both a SEP IRA and a Roth IRA in the same year. This is a form of tax diversification: some money sheltered today (pre-tax), some money taxed today (Roth), which gives you options about which account to draw from depending on your tax situation when you retire.
The income limit is the main constraint. Single filers with modified adjusted gross income above $150,000 begin to see their Roth contribution limit phase out, and it disappears entirely above $165,000 (2026 figures; confirm with IRS.gov as these adjust annually). At higher income levels, there’s a workaround — the “backdoor Roth IRA” — but that strategy involves nuances worth reviewing with a CPA before executing.
SIMPLE IRA — only if you have employees
2026 contribution limit: $17,600 employee deferral; employers must contribute either a 2% non-elective contribution or a 3% match
Best for: Self-employed women with a small number of W-2 employees
If you have employees and want to offer them a retirement benefit, the SIMPLE IRA is designed for businesses with 100 or fewer employees. It’s less complex than a full 401(k) plan but requires employer contributions on behalf of employees. For solo operators, the SEP IRA and Solo 401(k) are better choices — don’t open a SIMPLE IRA just for yourself.
Which one should you open first?
The answer depends on two things: how simple you want it, and how much you want to contribute this year.
Open a SEP IRA if: You want the fastest path to meaningful contributions with zero administrative overhead. You can open one at any brokerage in under an hour and contribute up to April 15 of the following year (including extensions). It is the default choice for founders who want to solve retirement today and revisit optimization later.
Open a Solo 401(k) if: You want to maximize contributions on a lower self-employment income, or you want the option to make Roth contributions inside the account. Note that the Solo 401(k) must be established by December 31 of the tax year you want to contribute for — unlike the SEP IRA, you cannot open it retroactively. Plan ahead.
Add a Roth IRA regardless: If your income falls under the phase-out threshold, a Roth IRA is worth funding every year in addition to your primary pre-tax account. The tax-free growth over decades is significant, and the flexibility to withdraw contributions (not gains) penalty-free before retirement provides a form of financial buffer most retirement accounts don’t.
The tax math that makes this urgent
This is the part most women miss until a CPA shows them the numbers.
Self-employment income is taxed at two levels: regular income tax and self-employment tax (15.3% on the first $176,100 of net self-employment income in 2026, dropping to 2.9% above that). Retirement contributions to a SEP IRA or traditional Solo 401(k) reduce only your income tax — not your self-employment tax — but that reduction is still significant.
A woman netting $80,000 in self-employment income who contributes $15,000 to a SEP IRA reduces her taxable income to $65,000. If she’s in the 22% federal bracket, that’s $3,300 in federal taxes saved. In California or New York, state income tax savings push that figure higher. Over a career, the tax savings alone — compounded alongside the investment returns — make retirement contributions one of the highest-ROI financial moves available to any self-employed person.
The one thing that actually stops women from doing this
It’s not confusion about the accounts. It’s the belief that there’s not enough left over after business expenses and taxes.
Here is the reframe: the contribution comes before taxes, not after. If you earn $80,000 in net profit and contribute $15,000 to a SEP IRA, your taxable income is $65,000. You don’t find the $15,000 after taxes — you reduce the bill taxes make, and the IRS partially funds your retirement in the process.
If you can afford to pay taxes on $80,000, you can afford to contribute to retirement. The question is whether you do it now, voluntarily, with a tax break — or wait until retirement and live on whatever’s left.
The women who retire with options started young and started simply. They didn’t wait for a perfect income level. They opened the account, made the contribution they could afford, and raised it as the business grew.
Open the account. Do it this quarter. Your future self is running a bigger business than you are now — make sure she has the financial infrastructure to match.
Frequently asked questions
What is the best retirement account for self-employed women?
For most solo founders and freelancers, the choice is between a SEP IRA and a Solo 401(k). The SEP IRA wins on simplicity — it takes about 15 minutes to open and has no annual filing requirement. The Solo 401(k) wins on contribution flexibility at lower income levels, because it allows an employee deferral on top of an employer contribution. If you’re earning $100,000 or more in self-employment income and want to shelter as much as possible, model both options with a CPA. If you want the simplest possible path, open a SEP IRA today.
How much can I contribute to a SEP IRA in 2026?
The 2026 SEP IRA limit is $72,000, or up to 25% of your net self-employment compensation — whichever is lower. For a self-employed person earning $100,000 in net profit, the maximum SEP IRA contribution is approximately $18,587 (the 25% calculation works differently for self-employment income due to the self-employment tax deduction). At $200,000 net profit, the contribution limit is approximately $37,174. Only at very high income levels does a SEP IRA reach the $72,000 cap.
What is the difference between a SEP IRA and a Solo 401(k)?
Both have the same 2026 contribution ceiling ($72,000). The key difference is how you get there. A SEP IRA only allows employer contributions — calculated as a percentage of your net self-employment income. A Solo 401(k) allows both an employee salary deferral (up to $24,500 in 2026, or $32,500 if you’re 50 or older) plus an employer contribution of up to 25% of compensation. This means at lower income levels, the Solo 401(k) lets you contribute more in dollar terms. The tradeoff: a Solo 401(k) requires more administrative setup and, once assets exceed $250,000, an annual Form 5500-EZ filing with the IRS.
Can I have both a SEP IRA and a Roth IRA?
Yes — these are separate account types with separate contribution limits. Roth IRA contributions ($7,500 in 2026, or $8,600 if you’re 50 or older) come out of after-tax money and don’t reduce your taxable income today. SEP IRA contributions reduce your taxable income now but are taxed as ordinary income when withdrawn in retirement. Holding both creates tax diversification: some money taxed now at potentially lower rates, some money sheltered today and taxed in retirement. Income limits apply to Roth IRA contributions — they begin phasing out above $150,000 for single filers in 2026.