Best Solo 401k and SEP IRA Providers for Solopreneurs
My accountant sent me a screenshot last February. It was a text exchange with another client, a graphic designer in Brooklyn, who had just opened a SEP IRA at a big bank. “It’s free to open,” she’d written. She missed the part where the fund expense ratios were 0.75%, or that she couldn’t contribute as much as a solo 401k would have let her. By the time I saw it, she’d already funded it for the year. Fixing it would have meant a complicated rollover and a conversation she didn’t want to have.
That moment stuck with me because it’s so common. Solopreneurs are told to “pay themselves first,” which is great advice, but most articles skip the part where the account you pick determines how much you can actually shelter from taxes. A traditional IRA caps you at $7,000. A SEP IRA lets you contribute up to 25% of your net self-employment earnings. A solo 401k lets you do the employer portion (25%) plus an employee deferral ($23,000 as of 2025). That can be a massive difference.
Below are the three providers I think solopreneurs should actually consider. I’ve focused on plans that don’t require you to be a finance person to manage, because most one-person businesses don’t have an HR department.
What makes the most sense for a solopreneur
Before getting into specific companies, it helps to understand why these three aren’t typical retirement accounts.
A SEP IRA is dead simple: you can contribute up to 25% of your net self-employment income, capped at $69,000 for 2025. Almost any brokerage offers one, and there are no annual filing requirements unless you run a SEP attached to a 401k. The downside: if you ever hire even one employee, you have to contribute the same percentage for them that you do for yourself. That can get expensive fast, which is why some people skip SEPs and go straight to solo 401ks.
A solo 401k (also called a one-participant 401k) is more flexible. You get the employer contribution (same 25% rule) and you get to make elective deferrals as the employee ($23,000, or $30,500 if you’re 50+). You can also choose a Roth option for the employee portion, which isn’t available in a SEP IRA. The tradeoff: once your plan assets exceed $250,000, you need to file Form 5500-EZ annually. It’s not hard, but it’s an extra step.
An Etrade solo 401k is the option I went with personally, though for the first two years I was tempted to just open a SEP at Vanguard and call it done.
#1 — Etrade Solo 401k: best for active traders and Roth lovers
Price: Free to open, $0 commission on stocks/ETFs.Why it’s the pick: Etrade’s solo 401k is one of the few that lets you choose between a traditional and Roth contribution for the employee deferral portion, and it also allows in-service rollovers. You can trade stocks, ETFs, and thousands of mutual funds inside the plan. There are no account fees, no minimum balances, and you can hold both Vanguard index funds (through their ETFs) and individual stocks in the same account.
The Roth option matters more than you might think. Most solopreneurs have lumpy income. One year you’re flush from a big project; the next year you’re launching something new and your taxable income is half what it was. Being able to put some money into a Roth bucket during a lean year - when your marginal tax rate is lower - and then switch back to pre-tax in a flush year is a real strategy. Most SEP IRAs don’t let you do that at all.
The downside: Etrade doesn’t offer a Roth option for the employer contribution, which no provider does, because employer contributions must be pre-tax. But the employee deferral Roth option alone makes this plan more flexible than a SEP.
If you want to do something more active with a portion of your retirement money - say, keep 80% in boring index ETFs and use 20% for stock picks - Etrade is the best place to do that inside a tax-sheltered account. Just don’t get cute with it. I know one designer who tried to day trade inside his solo 401k. He made $800 in January and lost $2,400 by March. The account still worked for his long-term holdings, but watching that swing every morning wasn’t worth the cortisol.
#2 — Vanguard SEP IRA: best for hands-off index fund investors
Price: Free to open, fund expense ratios 0.03% - 0.14%.Why it works: If you want the absolute lowest costs and you don’t need the higher contribution limits of a solo 401k, a Vanguard SEP IRA is hard to beat. The account itself costs nothing to open or maintain. You get access to Admiral Shares versions of Vanguard’s total market and target-date funds, which run as low as 0.03% per year. On a $50,000 balance, that’s $15 in annual fees. Compare that to a managed account from a full-service brokerage that might charge 1% ($500), and the math is brutal.
The catch, and it’s a real one, is the contribution limit. A SEP only lets you do the employer portion - up to 25% of net self-employment earnings. If you make $100,000 after expenses, that’s $25,000 max. A solo 401k at the same income level would let you do the $25,000 employer portion plus the $23,000 employee deferral, for a total of $48,000. That’s almost double the tax shelter.
So who should choose a SEP over a solo 401k? Three types of people: (1) those who already know they won’t max out the SEP limit and want fewer administrative headaches; (2) those who might hire employees soon and want to avoid a solo 401k that they’d have to convert later; and (3) those who want the Vanguard fund lineup and don’t want to deal with the ETF-only approach at some other brokerages.
I fall into category one for my first two years of Best business credit cards freelancers. I wasn’t earning enough to hit even the SEP cap, so the limit didn’t matter, and I liked that there was no Form 5500-EZ to think about. Once my income jumped in year three, I rolled the SEP balance into an Etrade solo 401k and started fresh with higher contributions.
Vanguard also offers solo 401ks, but they’re more limited: no brokerage option inside the plan, and the fund selection is restricted to Vanguard’s own products. That’s fine for most people, but if you want a true brokerage window, Fidelity or Etrade is a better fit.
#3 — Fidelity Solo 401k: best for full brokerage access and rollovers
Price: Free to open, $0 commission on stocks/ETFs.Why it works: Fidelity’s solo 401k gives you a full brokerage window inside the plan, which means you can buy individual stocks, ETFs, bonds, and even CDs. There are no annual fees, no minimums, and Fidelity has excellent customer service for self-employed plan questions. They also make it relatively easy to roll old employer 401ks into your solo 401k, which is a nice perk if you’ve got orphaned retirement accounts from a past job.
The Fidelity plan is a traditional solo 401k by default. They don’t currently offer a Roth option in their plan, which is the main reason I ended up at Etrade instead. They do offer both pre-tax and after-tax contributions (not Roth, but after-tax, which is different), and those after-tax contributions can be rolled into a Roth IRA later if you want to get creative with the “mega backdoor Roth” strategy. I don’t recommend trying that unless you already have a good accountant, because the reporting gets complicated.
Where Fidelity wins is flexibility inside the account. If you want to hold a mix of index funds and individual dividend stocks, or if you want to ladder CDs inside your retirement account, you can do that here. Their research tools are also better than average, which matters if you’re the kind of person who reads annual reports on Saturdays.
How much you can actually save on taxes
Numbers make this clearer. Let’s say you’re a freelance developer with $120,000 in net self-employment income.
With a SEP IRA, you contribute 25% of your net after the self-employment tax deduction: roughly $22,200. That saves you about $4,900 in federal taxes if you’re in the 22% bracket.
With a solo 401k, you do the same $22,200 employer contribution plus the full $23,000 employee deferral. Your total contribution is $45,200. At the same 22% bracket, that’s a $9,944 tax savings. That’s an extra $5,000 in your pocket this year just from picking the right account.
And that assumes you’re not in a higher bracket or a state with income tax. In California, at a 9.3% state tax plus federal, the delta is even bigger.
The only caveat: solo 401ks require a plan document. Fidelity and Etrade both provide a basic plan document for free when you open the account. You don’t need a lawyer or a third-party administrator to set it up, which is one reason these three providers are on this list and some specialized small business TPA firms aren’t.
What about the Form 5500-EZ?
Once your solo 401k balance crosses $250,000, you need to file Form 5500-EZ with the IRS each year. The form is two pages and mostly box-checking. Etrade, Fidelity, and Vanguard all give you a year-end summary with the numbers you need. You can file it yourself on the EFAST2 website or pay a CPA $200-$400 to do it.
I’ve been over the threshold for two years. I spend about an hour on the form in March. It’s not fun, but it’s also not a reason to avoid the account type. If the extra tax savings are worth a few hundred dollars and one spring afternoon, it’s a clear win.
SEP IRAs don’t have this requirement, which is one argument in their favor for people who hate paperwork more than they hate tax bills.
Who might skip these options
If you’re a side hustler with a full-time job that already offers a 401k, you need to be careful. The employee deferral limit ($23,000) is aggregated across all your 401k accounts. If you put $15,000 into your employer’s plan, you can only put $8,000 into your solo 401k as the employee. The employer contribution is separate, so you still get the 25% piece on top, but the employee portion is shared.
Also, if you’re currently a sole proprietor but plan to hire someone within the next two years, a solo 401k becomes more complicated. Regular employees (not contractors) trigger full 401k plan requirements once they meet age and hours-worked thresholds. At that point you’d need to convert to a multi-participant plan, which is a different product. A SEP IRA with employees is simpler administratively, though potentially more expensive because the employer contribution becomes mandatory for all eligible employees.
These aren’t reasons not to start. They’re reasons to know your timeline before you pick a provider.
Frequently asked questions
Can I have both a SEP IRA and a solo 401k?
Technically yes, but there’s no reason to. The contribution limits interact in a way that basically prevents double-dipping. You can, however, have a solo 401k and a traditional or Roth IRA at the same time, since IRAs have separate limits.
Do I need an EIN to open a solo 401k?
Yes. You need an employer identification number from the IRS to open the plan, even if you’re a sole proprietor without employees. It takes about 10 minutes on the IRS website and you’ll get it immediately.
What if I already maxed out my employer 401k this year?
You can still make the employer contribution to a solo 401k, which is based on your net self-employment earnings. You just can’t do the employee deferral portion if you’ve already hit the $23,000 aggregate limit.
Can I roll over a solo 401k to an IRA later?
Yes. Solo 401ks can be rolled into traditional or Roth IRAs when you close the plan or reach retirement age. Etrade and Fidelity both handle this with a few online forms.
What happens if my income drops next year?
Your contribution limit drops with it. Both SEPs and solo 401ks calculate the employer contribution as a percentage of net self-employment income. There’s no penalty for contributing less in a bad year.
My recommendation
If you have any meaningful self-employment income and you don’t already have a retirement account set up, the solo 401k is almost always the better choice. The Etrade solo 401k is my top recommendation because of the Roth option, the zero-fee structure, and the fact that you can trade almost anything inside it. It’s what I use.
Start with the EIN, open the account before December 31st (solo 401ks must be opened by year-end, unlike SEPs which can be opened and funded until your tax filing deadline), and set up an automatic monthly transfer if you can. Even $500 a month gets you to $6,000 a year, which is more than most people have.
The tax savings alone will pay for a good dinner. The compound growth over twenty years will pay for a lot more than that.
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FTC disclosure: Some links in this article are affiliate links. If you open an account through one, I may earn a small commission. I use Etrade and Vanguard personally, and I only recommend Best llc formation services freelancers I’d set up for a friend. Your costs are the same either way.