Retirement Saving for Self-Employed Agents: SEP, Solo 401(k) and IRA

Why does retirement saving look different for agents?

If you work as an independent contractor, there is no payroll department and no employer match. Your brokerage does not run a retirement plan for you. You are both the worker and the business owner, so the plan is yours to choose and fund.

That is a real change for people who come from salaried jobs. It also comes with a bright side. The IRS offers several plan types that were built for self-employed people, and some of them let you save more than an IRA alone.

This guide explains the four options the IRS names, what its pages say about limits and dates, and how to think about choosing. It is general education. Your tax professional decides what fits your income, your goals and your return. Our guide to taxes for Texas agents covers how self-employment income is taxed in the first place.

What are the main retirement options for a self-employed agent?

The IRS page on retirement plans for self-employed people (reviewed August 11, 2026) names a SEP IRA, a SIMPLE IRA and a solo 401(k), and links to IRA rules. Here is a plain comparison based on the IRS pages we read. Dollar limits change, so always check the IRS page for the year you are saving in.

How does a SEP IRA work?

A SEP IRA is the simple one. You fill out an IRS form or use a prototype plan from a bank or other financial institution, then open an account. The IRS says you can set up the plan for a tax year as late as your income tax return due date for that year, including extensions. That late deadline makes it popular with agents who know their income only after a busy year ends.

On contribution size, the IRS self-employed page says you can contribute as much as 25% of your net earnings from self-employment, up to a dollar cap, and that the calculation for your own contribution is special. The cap on that page is shown for 2024, so it is out of date for current use. Check the IRS page for the current-year cap before you fund an account.

The percentage is applied to net earnings after adjustments, not to gross commissions. That is why you need to know your net first. Our guide to Form 1099-NEC for agents and your own ledger help you land on that number.

How does a SIMPLE IRA work?

A SIMPLE IRA is built around salary deferrals. The IRS page lists a 2024 deferral limit of $16,000, with an extra $3,500 if you are 50 or older, and says you also add either a 2% fixed contribution or a 3% matching contribution. Those dollar figures are labeled 2024, so use them as an example of how the plan is built, not as the current limits.

The setup window is different from a SEP. The IRS says you can set up a SIMPLE IRA at any time from January 1 through October 1. If you became self-employed after October 1, you can set it up as soon as administratively feasible after your business starts. For a new agent who got licensed late in the year, that note may matter.

How does a solo 401(k) work?

The IRS calls it a one-participant 401(k). It is for a business owner with no employees, or that owner and a spouse. The page (reviewed April 9, 2026) says it follows the same rules as any other 401(k).

There are two kinds of contributions. As the employee, you can defer up to 100% of compensation, subject to the annual deferral limit. As the employer, the plan can add a nonelective contribution of up to 25% of compensation, with a separate calculation for self-employed people. The total to your account, not counting catch-up, cannot exceed the overall annual limit.

The IRS retirement topics page on 401(k) limits (reviewed April 8, 2026) lists these 2026 figures: an elective deferral limit of $24,500, a catch-up of $8,000 for people 50 and older, and an overall annual additions limit of $72,000 (with higher totals for catch-up). It also lists a higher catch-up of $11,250 for ages 60 to 63. Those are the rules for 401(k) plans in general, and your plan document can set tighter terms.

Two more points from the IRS one-participant page. A plan generally must file Form 5500-EZ if it has $250,000 or more in assets at the end of the year. And the nondiscrimination testing that other 401(k) plans face is not needed if you have no common-law employees. If you hire eligible employees later, that advantage can end.

What about a traditional or Roth IRA?

An IRA is the plan with the lowest paperwork. The IRS page on IRA contribution limits (reviewed September 23, 2026) lists a combined limit for traditional and Roth IRAs of $7,500 for 2026, or $8,600 if you are 50 or older. For 2025 the numbers were $7,000 and $8,000.

The page also says your contributions cannot exceed your taxable compensation for the year if that amount is lower than the limit. For a new agent with a slow first year, that rule matters. If you had a small net profit after expenses, your allowed IRA amount may be smaller than the headline limit.

Roth and traditional IRAs have different tax treatment and may have income rules that we did not cover here. Read the IRS IRA pages or ask a professional.

How do I choose between them?

There is no single best answer, and we are not going to pick one for you. These questions help you have a better talk with a CPA, an enrolled agent or a financial professional.

• How steady is my net income? A plan with required yearly contributions is harder in a lean year.
• Do I want a late setup deadline? A SEP can be set up by the return due date, including extensions.
• Do I plan to hire an assistant or a team? A solo 401(k) is only for owners with no employees other than a spouse.
• How much do I want to save? Compare the limits on the IRS pages for your tax year.
• How much paperwork will I keep up with? An IRA is simple. A solo 401(k) can require extra filings over time.
• Will I also have a spouse's plan or an old workplace plan? Existing plans can change what makes sense.

How do estimated taxes and retirement saving connect?

Many agents mix these up. A retirement contribution is not an estimated tax payment. You still have to plan for self-employment tax and income tax on your net earnings. The IRS says sole proprietors generally must make estimated payments if they expect to owe $1,000 or more when they file.

A good habit is to set aside a share of every commission into a tax account first, then a share into retirement, then spend what is left. The shares depend on your situation. A tax professional can help you set them. Our guide to first-year budgets for new agents shows how to build in room for taxes and savings.

What mistakes do agents make with retirement plans?

These are common patterns, not rules about any one person.

• Waiting until retirement feels close before opening any account.
• Putting retirement saving ahead of a tax reserve and then facing a bill in April.
• Using out-of-date limits from a blog. Always check the IRS page for the current year.
• Opening a plan for the business and forgetting the setup and filing dates.
• Treating the plan as a place to park money they might need next month.
• Skipping a professional review because the account looks easy to open.

How The Bauer Group fits

The Bauer Group is a Frisco brokerage welcoming licensed DFW agents. Opportunities are earned, not guaranteed. If you would like a calm conversation about how an office supports agents with training and planning, you can start on the join page.

Education only, not legal, tax or financial advice. Confirm licensing rules with TREC and ask a CPA, enrolled agent or financial professional about your own retirement plan. Last reviewed October 30, 2026.