When your income swings, the usual advice to “contribute X% of your paycheck” doesn’t quite fit. The good news: the retirement accounts self-employed people use are unusually forgiving. You don’t have to commit to an amount in advance. A SEP doesn’t require contributions every year, and several key deadlines fall after the year ends. So you can save a percentage of each payment as it arrives, then decide the final amount once you know what the year actually was.
Step 1: Taxes first, then a buffer, then retirement
Every dollar that arrives has three claims on it, in this order:
- Taxes. Set aside your federal (and state) share of each payment in its own account. Our set-aside guide gives the federal percentage by income level. Pay it out on the 2026 estimated tax dates.
- A cash buffer for the months when nothing comes in. This is practical advice, not an IRS rule. Without it, a slow quarter pushes you to raid savings.
- Retirement. A fixed percentage of each payment, kept in a separate savings account until you contribute it.
Step 2: Know your deadlines, because most fall after year-end
This is what makes the system work. For 2026 contributions:
| Account | Deadline for 2026 | Must contribute every year? |
|---|---|---|
| Traditional or Roth IRA | 2026 return's due date, not including extensions | No |
| SEP IRA: set up and fund | 2026 return's due date, including extensions | No |
| Solo 401(k): adopt a new plan (sole proprietor, no employees) | 2026 filing deadline, without extensions | Depends on the plan's terms |
Traditional or Roth IRA
- Deadline for 2026
- 2026 return's due date, not including extensions
- Must contribute every year?
- No
SEP IRA: set up and fund
- Deadline for 2026
- 2026 return's due date, including extensions
- Must contribute every year?
- No
Solo 401(k): adopt a new plan (sole proprietor, no employees)
- Deadline for 2026
- 2026 filing deadline, without extensions
- Must contribute every year?
- Depends on the plan's terms
Sources: Publication 590-A (IRA and Roth IRA deadlines; for 2025 contributions that meant April 15, 2026 for most people), Publication 560 (SEP setup and contribution deadlines; 401(k) adoption after year-end for sole proprietors). Solo 401(k) plans have their own rules on the timing of employee deferral elections: check your plan documents.
The practical upshot: in January or February 2027, when your 2026 books are closed, you can look at your actual net profit and then choose how much goes where.
Step 3: Size the contribution to the year you actually had
Here’s what the same freelancer (single, under 50) could put away in three very different years, using the math from our contribution calculator:
| Net profit | SEP IRA max | Solo 401(k) max | Roth IRA (if eligible) |
|---|---|---|---|
| $40,000 (slow year) | $7,435 | $31,935 | $7,500 |
| $90,000 (typical year) | $16,728 | $41,228 | $7,500 |
| $150,000 (strong year) | $27,881 | $52,381 | $7,500 |
$40,000 (slow year)
- SEP IRA max
- $7,435
- Solo 401(k) max
- $31,935
- Roth IRA (if eligible)
- $7,500
$90,000 (typical year)
- SEP IRA max
- $16,728
- Solo 401(k) max
- $41,228
- Roth IRA (if eligible)
- $7,500
$150,000 (strong year)
- SEP IRA max
- $27,881
- Solo 401(k) max
- $52,381
- Roth IRA (if eligible)
- $7,500
SEP and Solo 401(k) figures from our calculator's logic: 20% of (net profit − half of SE tax), plus a $24,500 deferral for the Solo 401(k). Roth IRA limit from IR-2025-111; at $150,000 the Roth eligibility depends on your MAGI after other deductions (full contribution below $153,000 for single filers). The Roth IRA shares its $7,500 limit with any traditional IRA.
A useful rule of thumb from the same math: below the Social Security wage base, the maximum SEP contribution is about 18.6% of net profit ($184,500 of net earnings for 2026). That’s 20% of net profit after subtracting half of self-employment tax. So if you save 18.6% of every payment into your retirement account, you’ll have exactly enough to max out a SEP after year-end. If you save more, a Solo 401(k) has room for it.
Step 4: Pick the account for the kind of year it was
- Slow year, low bracket: favor a Roth IRA. The deduction from a traditional contribution is worth little in a low bracket (in our example, 9.6% at the 12% bracket), and Roth money comes out tax-free later. You also have until the filing deadline to decide.
- Typical year: a Roth IRA plus a SEP IRA (or Solo 401(k)) contribution sized to what you actually saved.
- Strong year, higher bracket: max out the pre-tax plan. A Solo 401(k) allows $24,500 more than a SEP at most income levels. The deduction is worth more at 22% or 24%.
Step 5: Keep estimated taxes simple while you wait
You won’t know your final contribution, and so your final tax, until after year-end. Two IRS rules make that manageable:
- Safe harbor. Paying at least 100% of last year’s tax (110% if last year’s AGI was over $150,000) through timely estimated payments avoids the underpayment penalty, per the 2026 Form 1040-ES. That lets you pay a fixed, known amount each quarter without a penalty, whatever your final retirement contribution turns out to be. See Estimated Tax Deadlines and the Safe Harbor Rule.
- Annualized installments. If most of your income lands late in the year, the annualized income installment method in Publication 505 can lower the required early payments. Our quarterly estimated tax guide explains the regular method.
Bottom line
With irregular income, don’t try to guess your retirement contribution in January. Set aside taxes first, keep a buffer, and save a fixed share of every payment. Around 18.6% of net profit is enough to max out a SEP. Then use the post-year-end deadlines: the filing deadline for IRAs and new Solo 401(k)s, and the extended deadline for SEPs. That way you can match the contribution, and the Roth-or-traditional choice, to the year you actually had.