Solo 401(k) vs. SEP IRA in 2026: How S-Corp & Self-Employed Owners Shelter Up to $70,000+ From Taxes
Why a Solo 401(k) beats a SEP IRA for almost every S-Corp owner and solo entrepreneur in 2026—including employee + employer contribution stacking, Roth options, and catch-up rules.
Why it wins: LLC & S-Corp owners who want clean monthly books + proactive year-round tax reduction
On $180,000 Net Profit, an S-Corp Structure Saves ~$15,147/Year
By splitting $180,000 into a $81,000 W-2 salary and $99,000 distribution, you shield $99,000 from the 15.3% self-employment tax.
2026 Top Bookkeeping, Tax & Payroll Picks
RiverTaxes Done-For-You Bookkeeping + Proactive Tax Planning
Best For: LLC & S-Corp owners who want clean monthly books + proactive year-round tax reduction
- Combines monthly bookkeeping, S-Corp reasonable salary compliance, and tax filing under one roof
- Identifies $5,000–$18,000+ in legal annual tax savings
- Designed for active U.S. business owners and 1099 earners
Gusto S-Corp & Small Business Payroll
Best For: Running automated S-Corp owner W-2 payroll and W-2/1099 filings
- Automatic federal, state, and local payroll tax filings
- Requires separate bookkeeping & tax strategy (pairs seamlessly with RiverTaxes)
2026 IRS Compliance & Implementation Blueprint
For an S-Corp owner paying themselves a reasonable W-2 salary, a SEP IRA only allows employer contributions up to 25% of W-2 wages. A Solo 401(k), by contrast, lets you contribute BOTH as the employee ($23,500+ elective deferral) AND as the employer (25% of W-2 wages), reaching the annual maximum at a much lower W-2 salary—saving you thousands in payroll taxes AND income taxes simultaneously.
Run Your Numbers: S-Corp Tax Shield & Section 179 Vehicle Calculator
Frequently Asked Questions
Does RiverTaxes handle both monthly bookkeeping and year-end tax returns?
Yes. RiverTaxes provides done-for-you monthly bookkeeping, quarterly tax projections, S-Corp election & Accountable Plan documentation, and year-end business & personal tax preparation.
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