Can a solo 401(k) contribute to a SEP IRA?

For example, if they want to contribute 10% of the business’s income to their own plan in a given year, they have to do the same with every other employee with the plan. Catch-up contributions: While a solo 401 (k) plan allows for catch-up contributions for participants over 50, a SEP IRA does not.

What is the difference between a 401(k) and a SEP IRA?

A SEP IRA, known as a Simplified Employee Pension, is another option for the self-employed. It’s especially beneficial for small business owners who have full-time employees. There are two major differences between a Solo 401 (k) and SEP IRA. First, there is “no catch-up” contribution.

Should you use a solo 401(k)?

Using a solo 401 (k) avoids the problem of mixing pre-tax and after-tax funds in an IRA. It also enables individuals to roll over pre-tax funds from existing IRAs into the solo 401 (k) in order to execute the backdoor Roth strategy in the future. A SEP IRA may be a better option than a solo 401 (k) for some entrepreneurs.