SEP IRA: How It Works for Self-Employed Savers
If you're self-employed, freelancing, or running a small business, you've probably heard that a SEP IRA lets you save far more for retirement than a traditional or Roth IRA. That's true — the 2026 contribution limit is $70,000 or 25% of net self-employment income, whichever is less. Compare that to the $7,000 annual cap on traditional and Roth IRAs, and you can see why the SEP is the retirement vehicle of choice for high-earning solopreneurs. But the SEP IRA's simplicity comes with tradeoffs that aren't immediately obvious. There are no catch-up contributions, no Roth option, and if you have employees, the math changes dramatically. This guide covers exactly how SEP IRAs work in 2026, who they're best suited for, and when a Solo 401(k) might be the better play.