Alternatives to 401(k) Plans for Self-Employed Individuals

10 December 2025

So, you've ditched the 9-to-5 grind, kissed that cubicle goodbye, and now you're the boss of your own hustle. High five! But with great freedom comes a slightly terrifying amount of responsibility—like figuring out how the heck you're going to save for retirement without the sweet, familiar 401(k) your old employer offered.

Fear not, fellow freelancer, solopreneur, and side-hustle superstar! Just because you’re flying solo doesn’t mean your retirement dreams have to crash and burn. There are plenty of alternatives to 401(k) plans for self-employed individuals—and some of them are even better (gasp!) than the traditional 401(k).

Ready to dive into the retirement jungle and find your gold nugget? Let’s do this.

Why Traditional 401(k)s Don't Cut It For The Self-Employed

Before we jump into the alternatives, let’s talk about why you might need one in the first place. A 401(k), at its core, is just a tax-advantaged way to save for retirement. But if you don’t have an employer handing you one on a silver platter… well, you’re going to have to DIY that retirement fund.

And let's be real—being self-employed means you already DIY everything from marketing to coffee breaks. This is just another checkbox on your long list of entrepreneurial awesomeness.

The good news? You’ve got options. Lots of them. And some of them let you save a whole lot more than a regular ol’ 401(k) ever could.

1. The Solo 401(k): The 401(k)’s Cooler Cousin

Let’s start with something familiar: the Solo 401(k), also known as the Individual 401(k).

What the Heck Is It?

It’s basically a traditional 401(k), but it’s designed specifically for… you guessed it… solo business owners. That means it works great for freelancers, consultants, and small business owners with no full-time employees (except possibly a spouse).

Why You’ll Love It

- You wear two hats: one as the employer and one as the employee. This means you can contribute in both roles.
- You can contribute up to $23,000 in 2024 as an employee (plus a $7,500 catch-up if you're over 50).
- AND, you can contribute up to 25% of your net self-employment income as the “employer,” with total contributions capped at $66,000 (or $73,500 with the catch-up).

That’s a whole lotta cheddar you can stash away.

Pro Tip:

Go with a "Roth Solo 401(k)" if you want to pay taxes now but grow your money tax-free. Taxes are like cilantro—some people hate it and some people swear by it.

2. SEP IRA: Retirement for the Lazy Genius

Okay, no offense, but if you hate paperwork and want a low-maintenance way to save, the SEP IRA is your new BFF.

What Is It?

A Simplified Employee Pension Individual Retirement Account. (Yeah… that name just screams excitement.)

Why It Rocks

- Super easy to set up. Seriously, it’s like the IKEA furniture of retirement plans—basic, functional, and probably won’t break.
- You can contribute up to 25% of your net self-employment earnings, maxing out at $66,000 in 2024.
- Contributions are tax-deductible and grow tax-deferred until retirement.

Caveats:

- Unlike the Solo 401(k), you don’t get that sweet employee deferral. It’s all employer-based contributions.
- No Roth option here. Sorry, tax-free growth dreamers.

3. SIMPLE IRA: It’s In The Name (Sorta)

If you’ve got a few employees or just want something… well, simple (go figure), the SIMPLE IRA might be up your alley.

What It Is:

The Savings Incentive Match Plan for Employees. It's like a 401(k)'s chill younger sibling who just wants everyone to get along.

The Perks:

- Easy to establish and manage.
- Employee contributions max out at $15,500 for 2024 (plus a $3,500 catch-up for the 50+ crowd).
- Employers are required to contribute either a match up to 3% or a 2% flat contribution for all eligible employees.

Why It’s Kinda Meh:

- Lower contribution limits than Solo 401(k) or SEP IRA.
- Less control over contributions if business income fluctuates.

Still, it’s a decent choice for small biz owners who want to offer a simple plan without giving their accountant stress hives.

4. Traditional & Roth IRAs: The OGs of Retirement

Let’s not forget the classics. Traditional and Roth IRAs are the peanut butter and jelly of retirement accounts—basic, reliable, and surprisingly satisfying.

Contribution Limits

- You can contribute up to $6,500 in 2024 (or $7,500 if you’re over 50).
- Not much, but better than a piggy bank under the mattress.

Traditional IRA Pros:

- Contributions may be tax-deductible (depending on income).
- Taxes are deferred until you withdraw in retirement.

Roth IRA Pros:

- You contribute with after-tax dollars.
- Withdrawals in retirement? 100% tax-free.

The Superpower:

Income limits apply, especially for Roth IRAs—but if you earn too much, there’s the ol' backdoor Roth IRA trick. (But that’s a whole other rabbit hole.)

5. Health Savings Accounts (HSAs): The Sneaky Retirement Bonus

Wait. You're probably thinking, “Isn’t an HSA for medical expenses?” Yup. But hear me out.

Triple Tax Advantage (Say What?!)

- Contributions are tax-deductible.
- Money grows tax-free.
- Qualified withdrawals (for medical expenses) = also tax-free.

But here’s the catch: Once you hit 65, you can withdraw HSA funds for any reason—and you’ll only pay ordinary income tax, just like a traditional IRA. Basically, it turns into a stealthy little retirement account.

2024 Contribution Limits:

- $4,150 for individuals
- $8,300 for families
- $1,000 catch-up if you’re over 55

It’s like a Swiss Army knife for your finances.

6. Taxable Brokerage Accounts: The Wild West of Investing

Alright, this one isn’t technically a retirement account, but it could still be part of your master plan (cue evil laugh).

Why You Might Want It:

- No contribution limits
- No early withdrawal penalties
- Total investing freedom (stonks, index funds, crypto, moon cheese—whatever floats your boat)

The Downside:

- No tax breaks, and you’ll owe taxes on dividends and capital gains.
- Basically, Uncle Sam is always watching.

But it’s a great tool if you want access to your money before retirement age without the grim reaper of penalties looming over your head.

So… Which One Is Right for You?

Ah, the million-dollar question. Or hopefully, the couple-of-million-dollar-by-retirement question.

Here’s a quick cheat sheet:

| Account Type | Max Contribution (2024) | Best For |
|--------------------|--------------------------|-----------|
| Solo 401(k) | $66,000 ($73,500 w/ catch-up) | High earners with no employees |
| SEP IRA | $66,000 | Simple setup, high contributions |
| SIMPLE IRA | $15,500 ($19,000 w/ catch-up) | Small biz with a few employees |
| Traditional/Roth IRA | $6,500 ($7,500 w/ catch-up) | Everyone should have one |
| HSA | $4,150 individual / $8,300 family | If eligible, great tax perks |
| Taxable Brokerage | Unlimited | Early retirement or extra investing |

Mix and match like you're building a retirement smoothie. Who says you can’t have your IRA and drink your HSA too?

The Bottom Line (Literally)

Being self-employed doesn’t mean you’re off the retirement savings train. It just means you get to drive the train. On fire. With cool sunglasses. And maybe a coffee in hand.

You’ve got choices. You’ve got power. And chances are, you’ve got some sweet, sweet tax deductions coming your way.

Start small. Pick a plan (or two). Automate your contributions. Then go back to doing what you do best—whether that’s designing logos, fixing cars, or selling artisanal dog treats on Etsy.

Your future self is already planning how to thank you—probably from a hammock on a beach somewhere.