For 2026 you can defer up to $24,500 as the employee — plus an $8,000 catch-up at 50+, or $11,250 at ages 60–63 — and add an employer profit-sharing contribution: 25% of W-2 wages for a corporation, effectively 20% of adjusted net earnings for a sole proprietor, with combined non-catch-up contributions capped at $72,000. A sole proprietor netting $120,000 can contribute up to $46,804.45.
One plan, two hats
A solo 401(k) — the IRS calls it a one-participant 401(k) — covers a business owner with no employees, or the owner and their spouse. If the business has other employees, this is not the plan (or the calculator) for it. What makes the solo version powerful is that the owner wears two hats. As the employee, you make elective deferrals of up to 100% of compensation, up to the annual deferral limit. As the employer, the business makes a profit-sharing contribution of up to 25% of compensation as defined by the plan. The two hats are what let a one-person business shelter far more than an IRA allows — and they are also why the maximum is a worksheet, not a single percentage. This calculator runs both hats, shows which cap binds, and prints every step.
The 2026 limits
| Limit (2026) | Amount |
|---|---|
| Employee elective deferral — §402(g) | $24,500 |
| Catch-up, age 50+ | $8,000 (total deferral $32,500) |
| Catch-up, ages 60–63 only (SECURE 2.0) | $11,250 (total deferral $35,750) |
| Overall limit, excluding catch-ups — §415(c) | $72,000 |
| Combined ceiling with catch-up | $80,000 at 50+ · $83,250 at 60–63 |
| Compensation cap — §401(a)(17) | $360,000 |
Figures per IRS Notice 2025-67, announced in IRS News Release IR-2025-111, “401(k) limit increases to $24,500 for 2026.” Two caps ride along with the headline numbers. Annual additions excluding catch-ups also cannot exceed 100% of the participant's compensation. And no more than the first $360,000 of compensation counts in any percentage formula. Catch-up dollars sit outside the $72,000 limit — that is what lets the combined ceiling reach $83,250 at ages 60–63.
Why sole proprietors get 20%, not 25%
This is the most-misstated number in this corner of the internet. A corporation's 25% applies to W-2 wages — a figure fixed before the contribution exists. A sole proprietor has no W-2; their “compensation” for plan purposes is earned income figured after deducting the employer contribution itself. That circularity is why IRS Publication 560, Chapter 5, publishes a rate table for the self-employed: the self-employed rate is the plan rate divided by one plus the plan rate. For the maximum 25% plan rate, that is 0.25 ÷ 1.25 = 0.20 — an effective 20% applied to net earnings figured without deducting the contribution. Same limit, two statements. A calculator that applies 25% straight to a sole proprietor's net earnings overstates the legal maximum; one that applies 20% to a corporation understates it. The business-type selector above exists precisely so the two never get mixed up.
Worked example — sole proprietor, $120,000 net, under 50
The calculator is pre-filled with exactly this case. The sole-proprietor path starts with the self-employment tax, because it adjusts the earnings the percentages apply to:
- SE-tax base: $120,000 × 92.35% = $110,820.00
- SE tax: 15.3% of the base (the base is under the $184,500 Social Security cap, so the full rate applies) = $16,955.46; half = $8,477.73
- Adjusted net earnings: $120,000 − $8,477.73 = $111,522.27
- Employer contribution: 20% × $111,522.27 = $22,304.45
- Employee deferral: $24,500.00 (well under adjusted net earnings minus the employer part, $89,217.82)
- Total maximum: $46,804.45 — under the $72,000 §415(c) cap, so no cap binds. Estimated tax savings at a 22% marginal rate: $10,296.98
Note what the SE tax is doing here: it is an internal step that sizes the contribution room, not a bill this tool is estimating. For the tax itself, see the Self-Employment Tax Estimator. And the contributions themselves do not reduce SE tax — pre-tax contributions reduce income tax only.
The S-corp path — and when the $72,000 cap binds
For an S-corporation or C-corporation, only W-2 wages count as compensation. Distributions and K-1 income do not — a common and expensive misunderstanding, because an S-corp owner who keeps wages low to save payroll tax also shrinks their 401(k) room dollar for dollar. The employer contribution is a straight 25% of W-2 wages (on at most $360,000 of them). The cap interaction shows up at higher wages: an owner age 61 paid $200,000 of W-2 wages defers $35,750 ($24,500 + the $11,250 catch-up), and the employer part starts at 25% × $200,000 = $50,000 — but non-catch-up additions are capped at $72,000, so the employer contribution is trimmed to $72,000 − $24,500 = $47,500. The total is $83,250, the absolute 2026 maximum at ages 60–63, and the §415(c) cap — not the 25% formula — is what bound. Try it above: choose the corporation type, $200,000 of wages, and the 60–63 age band.
Catch-ups, the shared limit, and deadlines
The catch-up bands follow the age you reach by December 31, 2026. The higher $11,250 catch-up applies only if that age is 60, 61, 62, or 63; at 64 it falls back to $8,000. The two catch-ups never stack. One more limit this calculator cannot see: the $24,500 deferral limit is per person, across all plans. If you also defer into an employer's 401(k) at a day job, those deferrals consume the same $24,500 — subtract them before relying on the deferral figure here (the employer profit-sharing part and the per-plan §415(c) limit are separate). Finally, timing: plan-adoption and contribution deadlines vary by entity type and by whether the contribution is a deferral or the employer part, and missing them is not fixable after the fact — treat deadlines as confirm-with-a-professional territory rather than something to read off a calculator page. One limitation to know: at very high sole-proprietor incomes (adjusted net earnings above the $360,000 compensation cap), the cap interacts circularly with the worksheet; this calculator flags that zone instead of computing through it — re-check the maximum against Publication 560 there.