As a solopreneur, every dollar you earn and invest has to work harder for your future. The IRS gives you powerful opportunities to save for retirement in tax-advantaged accounts, but the rules can be confusing, and if you don’t know the limits, you may be leaving money on the table. With contribution limits always changing, it’s the perfect time to review your options and learn about maximizing retirement contributions.

Whether you want the highest contribution ceiling, the simplest administration, or flexible Roth opportunities, there’s a plan designed to fit your needs. This guide breaks down the 2025 limits and shows you how to make the most of your retirement savings through IRA Financial’s specialized solutions.

2025 Contribution Limits Takeaways

  • Solo 401(k): Defer up to $23,500 (employee). Total annual additions (employee + employer + after‑tax) up to $70,000, plus catch‑ups: $7,500 (50+) or $11,250 if age 60–63.
  • SEP IRA: Employer contributes up to 25% of comp, capped by the $70,000 annual additions limit. No catch‑ups.
  • SIMPLE IRA: Employee defers up to $16,500; catch‑ups $3,500 (50+) or $5,250 (age 60–63). Employer match up to 3% or 2% nonelective.

If you’re running a team of one (you and possibly a spouse), the Solo 401(k) typically lets you put away the most, with Roth, loan, and “Mega Backdoor Roth” options available through IRA Financial’s plan design.

2025 Quick Reference Contribution Limits (bookmark this)

  • 401(k) employee deferral: $23,500
  • 401(k) annual additions cap: $70,000 (excludes catch‑ups)
  • Catch‑up (50+): $7,500; age 60–63: $11,250
  • SIMPLE deferral: $16,500; catch‑up $3,500; age 60–63: $5,250
  • Comp limit for employer calc: $350,000 (All per IRS Notice 2024‑80)

Step 1 — Pick the right plan for your situation

IRA Financial offers four small‑business owner retirement options in one place: Solo 401(k), SEP IRA, SIMPLE IRA, and ROBS, so you can match your structure and hiring plans without switching providers later. 

Small Business Owner/Couple

1) “It’s just me (and maybe my spouse). I want the highest limit.” Choose the Solo 401(k)

  • Why it wins: Combines an employee deferral (up to $23,500) with employer profit‑sharing, and allows after‑tax contributions for the Mega Backdoor Roth, up to the $70,000 annual additions cap (catch‑ups extra). IRA Financial’s Solo 401(k) plan also includes standard Roth option, checkbook control, and Form 5500‑EZ prep, which removes admin friction.
  • Funding options: Traditional (pre‑tax) and Roth deferrals supported. Loans up to the lesser of $50,000 or 50% of your balance.

2) “I have (or will soon have) employees and want simple admin.” Go with the SIMPLE IRA

  • Why it fits: Payroll deferrals up to $16,500 per employee, plus required employer match (up to 3%) or 2% nonelective. Easy setup, immediate vesting. IRA Financial supports self‑directed investing if you want alternatives beyond mutual funds.

3) “I want deductible business contributions without employee deferrals.” → SEP IRA

  • Why it fits: Employer‑only contributions up to 25% of comp (subject to plan rules), capped by $70,000. Simple to run, but you must contribute the same percentage for all eligible employees. IRAF offers checkbook control or custodian‑directed setups.

Step 2 — Know your real max (with quick rules of thumb)

Employee side (Solo 401(k) & SIMPLE):

  • Up to $23,500 (401(k)) or $16,500 (SIMPLE) in 2025. Catch‑ups: $7,500 (50+) or $11,250 (age 60–63) for 401(k); $3,500 (50+) or $5,250 (age 60–63) for SIMPLE.

Employer side (Solo 401(k) & SEP):

  • Corporation/W‑2 wages: up to 25% of W‑2 comp (subject to the $350,000 comp cap for 2025).
  • Sole prop/LLC taxed as sole prop: use IRS Publication 560 worksheets—your “25%” becomes roughly 20% of adjusted net earnings after half the self-employment tax and the plan deduction itself. (Don’t guess; use the worksheet.)

Overall cap (very important):

  • The $70,000 annual additions limit covers employee + employer + after‑tax. Catch‑ups sit on top of that.

Example (S‑Corp, age 45): $180,000 W‑2

  • Employee deferral $23,500 + employer $45,000 (25%) = $68,500 (under the $70k cap). If age 50+, add $7,500 catch‑up → $76,000.
Retirement

Step 3 — If you want Roth firepower, design for it

  • Roth options now exist not only for 401(k) plans but also for SEP and SIMPLE plans (SECURE 2.0). Check that your provider supports them; IRA Financial does.
  • Mega Backdoor Roth (Solo 401(k)): After employer + employee, you can add after‑tax dollars up to the $70k cap, then convert in‑plan to Roth. IRAF’s Solo 401(k) also includes this option.
  • Heads‑up on high‑earner catch‑ups: The IRS delayed the “Roth‑only catch‑up for high earners” rule until 2026; for 2025, plans can still accept pre‑tax catch‑ups.

Step 4 — Timing & compliance (so you don’t lose deductions)

  • Adopt your Solo 401(k) by year‑end to make employee deferrals for that year; employer contributions can generally be made by your tax filing deadline (including extensions). Use IRS Pub 560 for exact timing and calculations.
  • SEP IRA contributions are due by the business return due date (extensions allowed).
  • SIMPLE IRA employee deferrals follow payroll‑deposit rules; employer match/nonelective is due by the business return due date.
  • Form 5500‑EZ: One‑participant 401(k)s generally file when plan assets exceed $250,000. IRA Financial includes 5500‑EZ prep with its Solo 401(k).

Step 5 — Put the plan to work with IRA Financial

IRA Financial is built for owner‑operators who want control and compliance:

  • Solo 401(k): flat pricing, checkbook control, mega backdoor Roth, loan feature, and free Form 5500‑EZ filing. 
  • Self‑Directed SEP IRA and SIMPLE IRA: enable alternative assets (real estate, private equity, crypto, metals) with checkbook or custodian control.
  • One hub for small‑business retirement with an easy open‑account flow and free consultation.

Quick Chooser: Which plan leaves less money on the table?

  • Max dollars, no full‑time W‑2s: Solo 401(k) (best all‑around; Roth + Mega Backdoor + loan).
  • You have staff and want ultra‑simple setup: SIMPLE IRA (lower limits but easy and includes employer match).
  • Profits vary and you prefer employer‑only contributions: SEP IRA (simple, big deductions, but same % to all eligible employees).
retirement plan

Conclusion on Maximizing Retirement Contributions

Choosing the right retirement plan for your business isn’t just about following IRS rules, it’s about creating a strategy that matches your business, your cash flow, and your long-term goals. By understanding the 2025 contribution limits, you can avoid leaving tax-advantaged dollars unused and build a stronger financial foundation for retirement.

For most solopreneurs, the Solo 401(k) offers the most flexibility and highest savings potential, but SEP and SIMPLE IRAs remain valuable tools depending on your situation. IRA Financial gives you the control, compliance, and expert support to make the process straightforward. The sooner you put your plan in place, the sooner your money can start compounding toward the retirement you deserve.

Frequently Asked Questions

How high can my “employer” contribution really go?

Use Publication 560’s self‑employed worksheets. For corporations it’s up to 25% of W‑2 comp; for sole props it’s roughly 20% of adjusted net earnings.

What if I’m age 60–63?

The “super catch‑up” lets you add $11,250 (401(k)) or $5,250 (SIMPLE) on top of regular limits in 2025, ideal in peak earning years.

Can I invest beyond index funds?

Yes. IRA Financial’s self‑directed structure allows real estate, private placements, crypto, precious metals, and more (subject to IRS rules).

Action plan for this week

  1. Choose a plan (likely Solo 401(k) if you’re owner‑only) at IRA Financial
  2. Run your numbers with Pub 560 worksheets and your CPA.
  3. Adopt the plan (don’t miss year‑end for deferrals).
  4. Design Roth/Mega Backdoor if you want tax‑free growth later.
  5. Book a free consult with IRA Financial to learn more and help with setup.