Big 401(k) Shifts in 2026: What Every Small Business Owner and Solopreneur Needs to Know

Real quick before we get into it: I write about money in plain language on purpose. Not because the content is lightweight, but because most financial writing is gatekept behind jargon designed to make regular people feel like outsiders at their own table. I am not for that. If you are new to this conversation, you are exactly who I built this for. And if you have been in the game a minute, you are still going to find something worth acting on.

Now let me also be transparent about where I am coming from. I am a small business owner. No employees on payroll. I run lean and I Voltron up, meaning I bring in other companies, specialists, and contractors when I need a specific skill or extra muscle. Nobody on my team is showing up late, sliding out early, taking paid vacations, or quietly taxing my inventory and my peace of mind. Dave Ramsey speaks on this all the time. The headaches of managing employees are real, and one of the smartest moves a solopreneur can make is structuring the business so you never have to babysit adults. If that is your world, keep reading. This is for you.

 
What Dropped in 2026 and Why You Need to Pay Attention

The IRS locked in the 2026 retirement contribution updates back in November 2025. As of mid-February 2026, Congress has not touched them. No surprises, no last-minute rewrites. These numbers are set, and if you are about building generational wealth and retiring with dignity, this is the kind of update that should have you leaning forward in your chair.

Your personal deferral limit is now $24,500. That is up a clean thousand dollars from 2025. The total contribution ceiling, stacking your deferrals plus employer contributions plus after-tax money, climbed to $72,000 from $70,000. If you are 50 or older, you can throw an extra $8,000 on top of that. And if you fall between 60 and 63, your plan may allow up to $11,250 in catch-up contributions. That is not pocket change. That is a bag.

Dave Ramsey’s foundational principle still applies here. You do not get to the retirement step until your non-mortgage debt is eliminated and you have three to six months of expenses sitting in a savings account doing nothing but protecting you. Once those two are handled, you go hard into retirement contributions. These new limits give you more room to stack when you are ready to move.

The Tax Trap That Will Catch High Earners Slipping

If your wages cleared $150,000 in 2025, this part is critical. Any catch-up contributions you make going forward must go into a Roth 401(k). You cannot take the pre-tax deduction on those extra dollars anymore. That pre-tax discount is gone for catch-ups if you are earning at that level.

Your regular contributions up to $24,500 can still be pre-tax if your plan supports it, but the catch-up money is after-tax Roth only. You pay taxes on it now. In exchange, it grows without the IRS touching it, and it comes out tax-free in retirement.

If you are in a high bracket today and expect to be in a lower one when you finally step away from the business, this stings a little upfront. But if tax rates climb over the next couple of decades, and there is every reason to believe they might, or if you are deliberately building a tax-free bucket of wealth you never have to pay on again, Roth is not a punishment. It is a power move. Do the math. If your plan does not offer a Roth option yet, your catch-up contributions may be blocked entirely until they add it. Know your plan.

Alternative Investments Are Knocking at the Door

An executive order signed in August 2025 cracked the door open for cryptocurrency, private equity, and real estate to potentially show up inside 401(k) plans. The total pool we are talking about is roughly $12 trillion in retirement savings. That is an enormous conversation.

My honest take, and this aligns with Dave Ramsey’s philosophy, is to slow your roll on this one. Plan adoption has been moving slowly for good reason. These are higher-risk, higher-complexity instruments that most people are not equipped to evaluate properly inside a retirement vehicle. Low-cost index funds have quietly turned everyday working people into millionaires over the long haul, with no drama, no speculation, and no waking up at 3am checking prices. If your plan eventually offers crypto or private equity, treat it like an advanced elective, not a prerequisite. Handle the fundamentals first.

For the Solopreneur Who Is Already Ballin on the Roth IRA

If you have already maxed your Roth IRA for 2026, which is $7,500 if you are under 50 or $8,600 if you are 50 or older, that is a flex worth acknowledging. A maxed Roth IRA is a tax-free compounding machine, and you should be proud of that discipline. But if your income is too high for direct Roth contributions, the phase-out hits at $153,000 for single filers and $242,000 for married filing jointly, you have probably already been doing a backdoor Roth conversion through a traditional IRA. Keep running that play.

Now the question is where you go from here. The Roth IRA is real, but the limits are modest relative to what a self-employed person can actually build. You need more runway. Here are three accounts designed specifically for people running their own operation.

Option One: The Solo 401(k)

This is the crown jewel for solopreneurs and small business owners with no full-time employees other than a spouse. This account lets you show up in two roles at the same table.

As the employee, you can defer up to $24,500. As the employer, you can contribute an additional 25 percent of your compensation on top of that. The total cap lands at $72,000, or up to $80,000 when catch-up contributions are included. A Roth version is available if you want to build that tax-free bucket we already talked about.

The upside is significant. The contribution limits dwarf what a standard IRA can hold. You can deduct the employer-side contributions as a legitimate business expense, reducing your taxable income right now. You have the flexibility to go pre-tax or Roth depending on where you are in the year and what your bracket looks like.

The trade-off is some setup work and administrative costs, though providers like Fidelity and Vanguard have made this far more accessible than it used to be. If your account balance crosses $250,000, the IRS requires an annual filing. And if your wages crossed $150,000 last year, your catch-up contributions must be Roth, which we already covered.

For a solopreneur who is serious about their financial future, this is the vehicle. Set it up before the end of the calendar year to be eligible for 2026 contributions.

Option Two: The SEP IRA

The SEP IRA is the most straightforward option on this list. As the employer, you can contribute up to 25 percent of your net self-employment earnings, capped at $72,000. No employee deferrals. Everything goes in pre-tax. No annual filings required if you are the only participant. And you have until your tax filing deadline, including extensions, to make contributions. If you need flexibility on timing, this account respects that.

The trade-off is that there is no Roth option, which means Uncle Sam gets his cut when you pull the money out in retirement. And if you bring on employees at some point, you are required to contribute the same percentage to their accounts that you contribute to yours. Depending on your team size, that gets expensive fast.

If you want the maximum tax deduction available to you right now without a lot of complexity, the SEP IRA delivers. If you are chasing Roth flexibility and want to build tax-free wealth, the Solo 401(k) is a better match.

Option Three: The SIMPLE IRA

The SIMPLE IRA is designed for small businesses that already have employees in the mix. Contribution limits are lower, sitting at $17,000 for 2026, with a $3,500 catch-up if you are 50 or older. You are also required to make employer contributions, either a flat 2 percent for all eligible employees or a 3 percent match. A Roth version is available, and new plans can be established by October 1 if you want to get moving this year.

For a solopreneur operating without employees, this is probably not your first call. But if you have a small crew and want to offer them something real while keeping the administrative load manageable, the SIMPLE IRA is a solid option. Just understand that the ceiling is lower than what a Solo 401(k) can offer, so pure savings power is not where this one shines.

The Bottom Line and the Move You Need to Make Today

These accounts can also be layered on top of your maxed Roth IRA for even greater impact. Just stay conscious of the combined contribution limits as you stack. If you are above the Roth income thresholds, keep running the backdoor conversion while using one of these plans to capture the larger numbers available to you.

Once the tax-advantaged accounts are fully loaded, the next level is a taxable brokerage account invested in low-cost index funds. This is Dave Ramsey’s baby steps logic applied to wealth building: eliminate the debt, secure the emergency fund, maximize the retirement accounts, then grow additional wealth with discipline and consistency.

You are already thinking like a business owner if you are running lean, bringing in specialized help when you need it, and staying clear of the employee management circus that drains so many entrepreneurs of time, money, and creative energy. Now make sure your retirement strategy matches that same level of intentionality.

Calculate your net earnings. Pick the account that fits how you are structured. Set it up now, not next quarter, not when things slow down. Now.

Your business is how you earn. Your retirement accounts are how you keep it, grow it, and eventually pass it. That is the game. Play it with your whole chest.

Drop a comment and let me know where you are in the process. Already running a Solo 401(k) like a pro? Just getting the Roth started? I read every reply and I want to hear from you