Quick answer
This calculator compares retirement saving as a W-2 employee with a 401(k) against self-employment with a Solo 401(k). On $120,000 of compensation with a $15,000 employee contribution, the W-2 side adds a 4% match ($4,800) for $19,800 a year; the Solo side adds $15,000 of profit-sharing for $30,000. Over 30 years at 7%, that gap compounds to $3,138,314 versus $2,174,814.
How the 401k vs Solo 401k works, step by step
Enter your current balance, compensation, employee contribution, the employer match in the W-2 scenario, and the profit-sharing contribution in the Solo scenario, plus your ages and expected return. The calculator projects both accounts to retirement age at the same return, from the same starting balance, so the only difference between the two lines is how much goes in each year.
The Solo 401(k) advantage is structural: as your own employer, you make both sides of the contribution. The employee side follows the same elective deferral limit as any 401(k). The employer side allows profit-sharing of up to 25% of compensation, subject to the overall annual additions limit — on $120,000 of compensation that is up to $30,000, against a 4% match of $4,800 on the W-2 side.
For tax year 2026 the IRS limits are $24,500 of employee deferral, plus an $8,000 catch-up at age 50 or older ($32,500 total) and an $11,250 catch-up for ages 60 to 63 ($35,750 total), with a combined employee-plus-employer limit of $72,000 (IRS Notice 2025-67). The calculator caps your employee contribution at the limit for your age and caps the Solo employer side at the $72,000 combined ceiling.
For the self-employed, 'compensation' has a specific meaning: net earnings after the deductible half of self-employment tax and after the employer contribution itself, which makes the effective maximum about 20% of net self-employment income for a sole proprietor. S-corps calculate it from W-2 wages instead, where the full 25% applies. The calculator's profit-sharing input takes your figure as given — your tax adviser computes the exact one.
Two sharing rules matter. The employee deferral limit is shared across all your 401(k)s combined — a W-2 employee with freelance income cannot defer $24,500 in each plan. And from 2026, catch-up contributions must be Roth for participants whose prior-year FICA wages from that employer exceeded $150,000, under SECURE 2.0. The projection itself is an estimate at a constant return; real markets vary year to year.
The formula
W-2 total = Employee contribution + (Match % × Salary). Solo total = Employee contribution + Profit-sharing, capped at the IRS overall limit ($72,000 for 2026, plus catch-ups if eligible). Projected value = Balance × (1 + r)^years + Annual × [((1 + r)^years − 1) ÷ r].
Worked example — try it on the calculator above
Worked example: $120,000 of income, $15,000 employee contribution, age 35 to 65
Starting balance $40,000, return 7%, 30 years. W-2 scenario: you defer $15,000 and your employer matches 4% of salary — $4,800 — for $19,800 a year going in, projecting to $2,174,814 at 65. Solo scenario: you defer the same $15,000 as employee, then your business adds $15,000 of profit-sharing, for $30,000 a year, projecting to $3,138,314. The $10,200 annual contribution gap becomes a $963,500 gap at retirement. Maxing the Solo side — a $24,500 deferral plus $30,000 of profit-sharing — puts $54,500 a year in, still inside the $72,000 combined limit.
Frequently Asked Questions
What is the 401(k) contribution limit for 2026?
The employee elective deferral limit is $24,500 for 2026 if under 50, with an $8,000 catch-up at 50-plus ($32,500 total) and an $11,250 catch-up for ages 60 to 63 ($35,750 total). The combined employee-plus-employer limit is $72,000, with catch-ups on top. These figures are published by the IRS each autumn in its cost-of-living notice.
Who can open a Solo 401(k)?
A self-employed person or business owner with no employees other than a spouse. If you hire other staff, you generally must move to a regular 401(k) or another plan. Side income counts: many W-2 employees with freelance income open a Solo 401(k) for that business, but the employee deferral limit is shared across all your 401(k)s combined.
What is the deadline for Solo 401(k) contributions?
The plan must be established by the end of the tax year (31 December) for the employee deferral to count for that year, and the deferral election is made by year-end. Employer profit-sharing contributions can typically be funded up to the business tax filing deadline, including extensions. Check the current rules with your plan provider, as SECURE 2.0 changed some deadlines.
Solo 401(k) or SEP IRA — which allows more?
At the same income, the Solo 401(k) usually allows more, because the SEP only has the employer side (up to 25% of compensation). At $60,000 of self-employment compensation, a SEP allows about $12,000 (the effective 20% for sole proprietors), while a Solo 401(k) allows that plus the full employee deferral. The Solo 401(k) also permits Roth contributions and loans, which a SEP does not.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.