Dillon Goodman, CPA, CFP®, works with owners in Fort Collins, Loveland, and the nearby towns from the Loveland office. This comparison ranks plans by eligibility and the 2026 IRS limits. It does not name a product and it does not grow an account.
Educational comparison using IRS limits for 2026; eligibility, nondiscrimination testing, coverage, and deadlines depend on the facts and the plan documents; not tax or legal advice. Figures are contribution limits, not projections of investment results. Vital Investment Management, LLC is a fee-only, independently owned, locally based, SEC-registered investment adviser. Registration does not imply a certain level of skill or training. Form ADV · Form CRS.
2026 limits
For 2026, the IRS elective deferral limit for a 401(k) is $24,500. The catch-up contribution is $8,000 at age 50 or older, and $11,250 for a person who turns 60, 61, 62, or 63 in 2026. Annual additions are $72,000. Compensation used for the percentage limits is capped at $360,000. A SEP contribution is limited to $72,000. A SIMPLE IRA deferral is $17,000, or $18,100 when the higher small-employer limit applies. The defined-benefit annual benefit limit is $290,000. That benefit limit is not a cash balance deposit and not a projected balance.
Rules as of 2026-10-22. Sources: IRS news release IR-2025-111 and Notice 2025-67.
Worked example
The same owner, with no employees, comparing the SEP employer cap with a solo 401(k) deferral plus employer contribution. The first eligible card on these entries is Solo 401(k), with an owner amount of $72,000 under the limits above.
SEP IRA
SEP employer contribution up to the lesser of 25% of compensation or $72,000 for 2026. Compensation counted for the percentage is capped at $360,000. Eligible employees receive the same percentage of pay that the plan uses for the owner. A self-employed owner's own dollar amount uses the reduced rate from IRS Publication 560. The employee percentage is not reduced the same way. In the worked example the owner amount under the published limits is $55,000.
Solo 401(k)
Employee deferral up to $24,500 for 2026, plus the age-based catch-up, and employer contributions inside the $72,000 annual-additions limit. A solo 401(k) is for an owner, and a spouse on payroll, with no other eligible employees. Annual additions, other than catch-up contributions, cannot exceed $72,000. An existing plan shares that limit. It is not a second full limit. In the worked example the owner amount under the published limits is $72,000.
Questions
What is the difference between a SEP and a solo 401(k)?
A SEP is employer contributions only, up to 25% of compensation and the $72,000 cap. A solo 401(k) adds an employee deferral of up to $24,500 for 2026, plus a catch-up contribution when the age rule applies, and it is unavailable once other eligible employees are entered.
How does a SIMPLE IRA compare with a SEP when there are employees?
A SIMPLE IRA requires a match or a 2% nonelective contribution and has a lower deferral limit than a 401(k). A SEP gives every eligible employee the same percentage as the plan uses for the owner, which can cost more when that percentage is high.
What does the cash balance card show?
It shows the 401(k) deferral and a 6% employer portion that can sit beside a cash balance plan, plus the $290,000 IRC section 415(b) annual benefit limit. The cash balance deposit is not calculated. Ask for an actuarial illustration.
Compare your own figures
Results appear on this page. Nothing is emailed unless you ask.
Educational comparison using IRS limits for 2026; eligibility, nondiscrimination testing, coverage, and deadlines depend on the facts and the plan documents; not tax or legal advice. Figures are contribution limits, not projections of investment results. Vital Investment Management, LLC is a fee-only, independently owned, locally based, SEC-registered investment adviser. Registration does not imply a certain level of skill or training. Form ADV · Form CRS.