A self-employed retirement quiz scores ten habits, not a retirement age. For a one-person business the useful result is a number from 0 to 20: whether an account exists, whether money moves on a schedule, and whether a slow month can raid it. The 2026 IRS limits below are the room you have after those habits are real.
If you run that business with no employees, you are a solopreneur. A freestyle entrepreneur builds the business around a life, then still has to fund the years after the work slows down. Nobody at a job will open the account or match a dollar. The rest of this cluster sits on Self-Employed Money.
General information, not financial, tax, or retirement advice. Figures are US federal limits for 2026, from IRS pages fetched November 3, 2026. The COLA table on IRS.gov, last reviewed August 24, 2026, still shows 2026 as its newest column. This quiz is a conversation starter, not a forecast. A fee-only planner or a CPA should look at your return before you contribute.
The quiz
It takes about three minutes. It will not tell you whether you can stop at 62. Pick the answer that is true today, not the one you plan to make true. Score each question 0, 1, or 2.
1. Do you have a dedicated retirement account?
- No account, or one I haven’t touched in years: 0
- Yes, but I contribute only when I remember: 1
- Yes, and money goes in on a schedule: 2
2. How much of your net business income goes into retirement savings?
- Under 5%, or nothing: 0
- 5% to 14%: 1
- 15% or more: 2
3. Is the saving automatic?
- I decide each time: 0
- I make a big payment once a year: 1
- A monthly or per-invoice transfer runs without me: 2
4. Do you have a rainy-day fund that is separate from retirement money?
- Less than a month of expenses: 0
- One to three months: 1
- Three months or more: 2
5. Do you know your target number?
- No idea: 0
- A rough guess: 1
- I have a number and I have tested it with a calculator or a planner: 2
6. Have you looked at your Social Security earnings record?
- Never: 0
- Once, a long time ago: 1
- I’ve checked it in the last year or two: 2
7. How is your debt?
- High-interest balances that I carry month to month: 0
- A mortgage and some manageable loans: 1
- No high-interest debt: 2
8. Is your retirement money invested for the long term?
- It sits in cash or I don’t know what it’s in: 0
- Partly invested, but I haven’t reviewed it: 1
- Diversified, low-cost, and checked at least once a year: 2
9. What happens to your income if you can’t work?
- It stops, with no backup: 0
- I have some savings to lean on: 1
- I have disability insurance or a solid plan: 2
10. Does your business have value beyond you?
- It’s just me, and it ends when I stop: 0
- Some recurring clients or assets could be sold or handed off: 1
- I’ve thought about an exit and am building toward it: 2
Score yourself
Add your points. The maximum is 20.
- 0 to 7: Red zone. Not a verdict. The first moves are ordinary: open an account and set one automatic transfer this week.
- 8 to 13: Yellow zone. Some of the structure is there. Make the transfer automatic and raise the rate when income rises.
- 14 to 17: Green zone. The habits are in place. Close the gaps, especially a backup if you cannot work and a yearly look at the investments.
- 18 to 20: Gold zone. The score says the system is running. Revisit it once a year and keep the transfer on.
What a low score is telling you
Low on questions 1 to 3? That is a systems problem. Self-employed income is lumpy, so “save what’s left” often means saving nothing. Pay the account first, as a percentage of money that actually lands. If clients pay late, the transfer never starts. The cash side of that is in late payments from clients.
Low on question 4 or 9? Retirement savings and a cash cushion do different jobs. The IRS says most retirement plan distributions are subject to income tax and may face an additional 10% tax. A withdrawal from an IRA or a retirement plan before age 59½ is generally early, and that 10% tax applies unless an exception fits. A slow quarter is a bad time to find out which exception you do not meet.
Low on questions 5 and 6? You are flying without a number. Pull your Social Security earnings record, run a calculator, and write down a target you can check. If the gap is wearing you out, beating business burnout is the companion piece.
Low on question 10? The business is a retirement plan only if someone will buy it or keep paying after you stop showing up. Read business exit strategy and build a plan B that does not depend on a sale.
Your 2026 account options
You have more room than a typical employee menu. The plan document can set a lower elective-deferral cap than the IRS, and catch-up amounts apply only if the plan allows them. These are the federal ceilings fetched November 3, 2026.
| Account | 2026 ceiling | Catch-up, if the plan allows |
|---|---|---|
| Solo 401(k). The IRS name is a one-participant 401(k). | Employee deferral $24,500, up to 100% of earned income. Employer nonelective up to 25% of compensation, then the self-employed reduction below. Annual additions before catch-up: the lesser of 100% of compensation or $72,000. Pay that counts stops at $360,000. | $8,000 if you are 50 or older at year-end, or $11,250 if you turn 60, 61, 62, or 63 in 2026. With catch-up included, the limits page states $80,000, or $83,250 at those ages. |
| SEP-IRA | Employer money only, up to 25% of pay, dollar cap $72,000, same $360,000 pay cap and the same self-employed math. Adopt it as late as the return due date, including extensions. | No employee deferral. One percentage for every eligible employee who worked that year, even if they leave or die before you fund it. |
| Traditional or Roth IRA | $7,500 across your traditional and Roth IRAs, or $8,600 at 50 or older, and not more than taxable compensation. No age cutoff on regular contributions. | The $1,100 is already inside the $8,600. It is due by the return due date, not including extensions. |
| SIMPLE IRA | Generally $17,000. Certain applicable SIMPLE accounts can use $18,100. IR-2025-111 does not, in that sentence, say which employers qualify. | Generally $4,000, or $3,850 for certain applicable plans. $5,250 if you turn 60, 61, 62, or 63 in 2026. |
Elective deferrals are per person, not per plan. A solo 401(k) does not reset the $24,500 if a W-2 job already used it. The $72,000 cap applies to one employer and related employers, so the day-job deferral does not, by itself, spend the solo plan’s employer room. The IRS illustrates that split with 2020 dollars. Use the table.
Do not multiply profit by 25%
A percentage of pay works for employees. The IRS says you cannot multiply Schedule C net profit by that percentage. Subtract the deductible half of self-employment tax and your own contribution. Those amounts depend on each other. The page’s reduced rate equals the plan rate divided by 100% plus the plan rate. It shows 10% becoming 9.0909%. The same steps make a 25% employer rate 20%. That 20% is the employer slice. Run Publication 560 for the rate you actually adopt. The calculation page’s pay caps stop in 2024. The 2026 cap is $360,000.
The employee deferral is the other hat: up to 100% of earned income, which already reflects those subtractions, and $24,500 before catch-up. A one-participant plan is an owner with no common-law employees, or that owner and a spouse. At $250,000 or more in assets at year-end, file Form 5500-EZ. Below that, you may be exempt. Hire someone who meets the eligibility rules, and the pass on nondiscrimination testing ends. Form 5305-SEP is not filed with the IRS. You cannot use that model form if the business keeps another qualified plan besides a SEP.
IRA phase-outs and the Roth catch-up rule
You can fund a traditional or Roth IRA even when a plan through your employer or business already exists. You may not get the traditional deduction. For 2026, if you are covered by a workplace plan, the phase-out is $81,000 to $91,000 for single filers and $129,000 to $149,000 on a joint return when the spouse who contributes is the covered one. If you are not covered and your spouse is, the joint range is $242,000 to $252,000. Covered and filing separately stays $0 to $10,000. If neither spouse is covered, those phase-outs do not apply. Roth contributions phase out from $153,000 to $168,000 for singles and heads of household, and from $242,000 to $252,000 for joint filers. Separate filers stay at $0 to $10,000. Neither separate-filer range gets a cost-of-living bump.
Beginning in 2026, the IRS catch-up page says catch-up contributions in a plan with a Roth feature must be Roth if prior-year wages from the plan sponsor exceeded $150,000. Final regulations in Internal Revenue Bulletin 2025-40 keep a SEP arrangement and a SIMPLE IRA plan outside the Roth catch-up requirement. A person with no FICA wages from the sponsoring employer is outside it too. The preamble’s example is a partner who had only self-employment income. The test is FICA wages, not Schedule C profit. The bulletin’s detailed Roth catch-up regulations generally apply to contributions in tax years beginning after December 31, 2026. Before that date, the bulletin calls for a reasonable, good-faith reading of the statute. If the business pays you only net earnings from self-employment, ask the provider whether any W-2 wages exist before you mark a catch-up pre-tax.
A quick example
Say you are 45 and the consultancy nets a steady $90,000. That is a hypothetical, not a client. A $13,500 solo 401(k) deposit, 15% of that $90,000, sits under the $24,500 deferral and under the $72,000 cap. It is a pace, not the Publication 560 worksheet. Raise it in a strong year and cut it in a thin one. A CPA still runs the earned-income math on the real return.
What you decide, what a tool drafts, what you check
In November 2026 a general writing assistant can turn a stack of invoice dates into a reminder list. It does not know your plan document, and it will invent a limit if you let it. Do not crown a product.
| You decide | A tool drafts | You check |
|---|---|---|
| SEP, solo 401(k), or IRA, and the percentage of each deposit you can keep in a thin month | A one-page transfer calendar from dates you paste in | The dollars left the business account, and the amount is inside the 2026 row for your age |
| Whether this year is a catch-up year, and whether any wages were W-2 wages | Questions for the CPA, including the Roth catch-up test | Prior-year FICA wages from the sponsoring employer, not a guess at profit. SEP and SIMPLE IRA stay outside that test |
| The employer percentage you intend | Nothing you file | The Publication 560 reduced rate, the deduction on Form 1040 Schedule 1, and that it was not buried on Schedule C |
The takeaway: three moves this month
- Open the account. If you do not have one, pick a SEP-IRA, a solo 401(k), or an IRA at a provider whose fee sheet you have read. Do it this week. If you already have employees, skip the “one-participant” label until a CPA confirms who must be included.
- Automate a percentage. Start at a rate you can pay in a bad month, even 5%, and move it the day the client pays. Raise it when income rises.
- Get a number. Pull your Social Security earnings record, use a calculator, and write down the target. Repeat this quiz in six months.
Retirement for a one-person business is the transfer you actually run, not the account you meant to open. The tax side of the contribution sits in avoiding the taxman and in year-end tax planning.
Grab the free One-Person Business AI Stack checklist when you want a one-page list of what you decide, what software drafts, and what you still check yourself.
Sources
All fetched November 3, 2026.
- IRS, IR-2025-111, November 13, 2025. The 2026 deferral, IRA, Roth, deduction phase-out, and SIMPLE dollar amounts in the table, including $18,100 and $3,850 for certain applicable SIMPLE accounts. News items may not be updated after release. The topic pages below match the 2026 figures.
- IRS, COLA increases for dollar limitations, last reviewed August 24, 2026. Newest column on that page is 2026, including the $72,000 and $360,000 lines.
- IRS, 401(k) and profit-sharing contribution limits, last reviewed April 8, 2026. The $24,500, $72,000, $80,000, $83,250, and $360,000 figures, the per-person deferral rule, and the note that plan terms can set a lower cap. Worked examples on that page use 2020 dollars.
- IRS, Catch-up contributions, last reviewed May 7, 2026. Who turns 60, 61, 62, or 63. The Roth catch-up sentence for 2026 if prior-year wages exceeded $150,000. SIMPLE and IRA catch-up timing.
- IRS, IRA contribution limits, last reviewed September 23, 2026. The $7,500 and $8,600 caps, contributions despite a workplace plan, and no age limit after 2019. Roth income links on that page point at 2023 and 2024. The 2026 Roth ranges are from IR-2025-111.
- IRS, One-participant 401(k) plans. Owner with no employees, or the owner and a spouse. Earned-income definition. Deferrals by person, not by plan. Testing once employees are eligible. Form 5500-EZ at $250,000 of assets.
- IRS, Simplified Employee Pension plan (SEP). Employer-only contributions up to 25% of pay, uniform percentage, setup and funding by the return due date including extensions, Form 5305-SEP not filed with the IRS, and the bar on using that model form beside another qualified plan.
- IRS, Calculating your own retirement-plan contribution. Do not multiply Schedule C profit by the employee percentage. The reduced-rate steps, shown as 10% to 9.0909% in a 2019 illustration. Deduct on Schedule 1, not Schedule C. Pay-cap list on this page stops at 2024.
- IRS, Exceptions to tax on early distributions, last reviewed December 11, 2025. Income tax plus a possible 10% additional tax before age 59½ unless an exception applies.
- IRS, Internal Revenue Bulletin 2025-40. FICA wages under section 3121(a). SEP and SIMPLE IRA plans are outside the Roth catch-up requirement. A partner with only self-employment income is the preamble’s example of someone with no FICA wages. Section 1.414(v)-2 generally applies to contributions in tax years beginning after December 31, 2026. Before that, use a reasonable, good-faith reading of the statute. The $150,000 threshold for 2026 is on the catch-up topic page. This bulletin’s statutory starting figure is the pre-adjustment $145,000.