Solo 401(k) for Real Estate Agents: $39,370 on $80K Profit

In 2026, a self-employed real estate agent with no employees can contribute up to $24,500 as the “employee”, plus roughly 20% of adjusted net self-employment income as the “employer.” The combined total is capped at $72,000. Agents aged 50–59 or 64+ can add an $8,000 catch-up. Agents aged 60–63 can add $11,250 instead, if the plan allows it (IRS, Notice 2025-67). With $80,000 of net profit, an agent under 50 can contribute about $39,370.

For agents, the calculation takes more care: your income arrives as irregular commission checks, gets cut by brokerage splits and fees, and may run through an LLC or S-corp.

According to NAR’s 2026 Member Profile, the median Realtor earned $59,200 in gross income in 2025, with median business expenses of $9,530. The same profile puts the median member age at 57, so many agents qualify for catch-up contributions.

Limit	2026
Employee deferral	$24,500
Catch-up, ages 50–59 and 64+	+$8,000
Catch-up, ages 60–63 (if the plan allows)	+$11,250
Employer contribution (sole proprietor)	~20% of adjusted net earnings
Employer contribution (S-corp)	25% of W-2 salary
Combined limit (excluding catch-up)	$72,000
Maximum compensation considered	$360,000

• Employee deferral

  2026

  $24,500

• Catch-up, ages 50–59 and 64+

  2026

  +$8,000

• Catch-up, ages 60–63 (if the plan allows)

  2026

  +$11,250

• Employer contribution (sole proprietor)

  2026

  ~20% of adjusted net earnings

• Employer contribution (S-corp)

  2026

  25% of W-2 salary

• Combined limit (excluding catch-up)

  2026

  $72,000

• Maximum compensation considered

  2026

  $360,000

Source: IRS Notice 2025-67 and IR-2025-111.

For the rest of an agent’s taxes, including commissions, closing gifts and driving, see real estate agent taxes in 2026.

Can a real estate agent open a Solo 401(k)?

Usually, yes. The IRS treats most licensed agents as statutory nonemployees. If substantially all of your pay is tied to sales rather than hours worked, and your written contract says you won’t be treated as an employee for federal tax purposes, you’re self-employed for tax purposes. You typically get a 1099-NEC, file Schedule C, and pay self-employment tax.

To qualify, you need:

• Self-employment income. Commissions and referral fees you earn as an agent count.
• No employees other than you and your spouse. A spouse who earns income from the business can join the plan (see Can My Spouse Contribute to My Solo 401(k)?).

How you set up your business changes the math, not your eligibility:

• Sole proprietor or single-member LLC (the default): Contributions are based on Schedule C net profit.
• LLC taxed as an S-corp: Contributions are based only on the W-2 salary the S-corp pays you. There’s a section on this below.

Two situations often confuse agents:

• You also have a W-2 job. You can still have a Solo 401(k) for your real estate income. The $24,500 employee deferral limit is shared across all your 401(k) plans, while employer contributions are subject to separate plan and compensation limits (IRS). Can I Have a Solo 401(k) and a 401(k) at Work? goes through the split.
• You own rental properties. Rental income generally isn’t self-employment income, so it can’t be used to calculate Solo 401(k) contributions. Only your commission business counts.

How contributions are calculated on commission income

Several different “income” numbers are involved, and mixing them up is the usual source of errors.

Term	What it means for an agent	Where it’s reported
Gross commission income (GCI)	Total commission credited to you on your deals, before the brokerage split	Your brokerage’s commission statements
Brokerage split and fees	The brokerage’s share of your GCI, plus fees such as transaction, desk or franchise fees	Your commission statements
Business revenue (gross receipts)	Commission income paid to you, usually reported on Form 1099-NEC. Depending on how your brokerage reports, splits and fees may already be excluded or may need to be deducted	Schedule C, line 1
Business expenses	Vehicle, MLS and association dues, desk fees, marketing, E&O insurance, licensing, software	Schedule C
Net profit	Business revenue minus business expenses	Schedule C, line 31
Net earnings from self-employment	Net profit × 92.35%, the base for SE tax	Schedule SE

The employer contribution uses a further figure: net profit minus the deduction for half of your self-employment tax. The plan’s 25% rate works out to 20% of that figure, because the contribution reduces the same income it’s calculated from. The IRS explains this in Publication 560 and on its self-employed contribution page.

The employee deferral isn’t a percentage. You can defer up to $24,500 (plus catch-up) as long as your earnings cover it.

For commission income in particular:

1. The date you’re paid generally decides the tax year. Most agents use the cash method, so a commission generally counts in the year you receive it. A check you get on December 30 belongs to 2026. The same deal paid on January 4 belongs to 2027, along with its contribution room.
2. Check your 1099-NEC against your commission statements. Brokerages differ in whether fees taken out of your check are already excluded from the 1099. Make sure each fee is either left out of income or deducted as an expense, never both and never neither.
3. Every deductible expense lowers your employer contribution. A $1,000 expense (like business mileage) reduces the employer contribution by roughly $186. The effect is small, but it’s why you can’t calculate the final amount until your books are closed.

Schedule C net profit	Under 50	Age 50–59 or 64+	Age 60–63
$40,000	$31,935	$37,174*	$37,174*
$60,000	$35,652	$43,652	$46,902
$80,000	$39,370	$47,370	$50,620
$100,000	$43,087	$51,087	$54,337
$150,000	$52,381	$60,381	$63,631

• $40,000

  Under 50

  $31,935

  Age 50–59 or 64+

  $37,174*

  Age 60–63

  $37,174*

• $60,000

  Under 50

  $35,652

  Age 50–59 or 64+

  $43,652

  Age 60–63

  $46,902

• $80,000

  Under 50

  $39,370

  Age 50–59 or 64+

  $47,370

  Age 60–63

  $50,620

• $100,000

  Under 50

  $43,087

  Age 50–59 or 64+

  $51,087

  Age 60–63

  $54,337

• $150,000

  Under 50

  $52,381

  Age 50–59 or 64+

  $60,381

  Age 60–63

  $63,631

*Capped because total contributions can't exceed net earnings after the half-SE-tax deduction. All figures are rounded to the dollar and assume no contributions to other 401(k) plans. The age 60–63 column assumes your plan offers the higher catch-up.

If your business is an S-corp

With an S-corp, only your W-2 salary counts. Distributions reported on your K-1 don’t.

• Employee deferral: up to $24,500, plus catch-up, but no more than your salary
• Employer contribution: 25% of your W-2 salary
• Combined limit: $72,000, excluding catch-up

For example, if your S-corp pays you a $60,000 salary, you can defer $24,500 and add $15,000 as the employer (25% × $60,000), for a total of $39,500.

A low salary saves payroll tax but shrinks your Solo 401(k) room. Your salary must also be “reasonable compensation” in the IRS’s view, so set it with your CPA, not just to maximize contributions. S Corp Election for Freelancers covers the trade-off.

	Sole proprietor or LLC	S-corp
Income that counts	Schedule C net profit	W-2 salary only (not K-1 distributions)
Employer contribution	~20% of net profit minus half of SE tax	25% of W-2 salary
Employee deferral	Up to $24,500 + catch-up	Up to $24,500 + catch-up, no more than salary
Late first-year deferrals (SECURE 2.0)	Available	Not available
Roth catch-up rule ($150,000 FICA wages)	Generally not expected to apply	Can apply

Income that counts

Sole proprietor or LLCSchedule C net profit

S-corpW-2 salary only (not K-1 distributions)

Employer contribution

Sole proprietor or LLC~20% of net profit minus half of SE tax

S-corp25% of W-2 salary

Employee deferral

Sole proprietor or LLCUp to $24,500 + catch-up

S-corpUp to $24,500 + catch-up, no more than salary

Late first-year deferrals (SECURE 2.0)

Sole proprietor or LLCAvailable

S-corpNot available

Roth catch-up rule ($150,000 FICA wages)

Sole proprietor or LLCGenerally not expected to apply

S-corpCan apply

Sources: Publication 560; Notice 2025-67.

Full example: $80,000 of net profit

Jordan is 41, a sole proprietor, and has no other retirement plan.

From commissions to net profit:

• Commission income received after brokerage split (Schedule C gross receipts): $112,000
• Business expenses: $32,000
  • Vehicle: $11,000
  • Marketing: $9,000
  • Dues and desk fees: $6,000
  • Phone and software: $3,500
  • E&O, licensing and education: $2,500
• Net profit: $80,000

1. 1

   Net profit (Schedule C)

   $80,000
2. 2

   Net earnings from self-employment

   $80,000 × 92.35%

   $73,880
3. 3

   SE tax

   $73,880 × 15.3%

   $11,304
4. 4

   Deductible half of SE tax

   $11,304 ÷ 2

   −$5,652
5. 5

   Adjusted net earnings

   $80,000 − $5,652

   $74,348
6. 6

   Employer contribution

   $74,348 × 20%

   $14,870
7. 7

   Employee deferral

   2026 limit, under 50

   +$24,500
8. 8

   Maximum Solo 401(k) contribution

   $39,370

IRS reduced-rate method (Publication 560). A SEP IRA would allow only the $14,870 employer portion. Rounded to the dollar.

Jordan’s contributions lower income tax but not self-employment tax. The $11,304 of SE tax stays the same either way.

Example with irregular income

Maria is 52. Her 2026 looks like a typical agent’s year:

Quarter	What happened	Net result
Q1	No closings, ongoing expenses	−$3,000
Q2	Two closings	+$12,000
Q3	Busy summer	+$31,000
Q4	One closing	+$10,000
Year		$50,000

Only the annual figure matters. A strong summer doesn’t raise her limit, and an empty first quarter doesn’t lower it.

The calculation:

1. Net earnings from self-employment: $50,000 × 92.35% = $46,175
2. SE tax: about $7,065. The deductible half is $3,533.
3. Adjusted net earnings: $50,000 − $3,533 = $46,467
4. Employer contribution: 20% = $9,293
5. Employee deferral: $24,500 + $8,000 catch-up = $32,500

Total: $41,793. Her contribution is high relative to her net profit because the employee deferral and catch-up aren’t a percentage of profit. It’s allowed because it stays below her $46,467 of adjusted net earnings.

How Maria handles a year like this (more in How to Save for Retirement With Irregular Income):

• Sets up the plan and signs her deferral election before December 31. For employee deferrals in any year after the first, this is generally required. Solo 401(k) vs. SEP IRA explains the December 31 step.
• Saves a fixed share of every commission check in a separate account, instead of guessing her contribution in June.
• Makes the final contributions once her books close. Employer contributions can go in up to the tax filing deadline, including extensions.
• Checks the first-year rules if she’s new to the plan. A new plan can be adopted after year-end for the employer contribution, by the return’s due date including extensions (IRC 401(b)(2)). For deferrals, under SECURE 2.0, the owner of an unincorporated business who is its only employee can adopt a new 401(k) after year-end and, for the first plan year only, make employee deferrals for the prior year up to the tax return due date, without extensions (IRS, Publication 560). This doesn’t apply to S-corps.

She also keeps up with her quarterly estimated taxes through the year.

Roth vs Traditional

Many Solo 401(k) plans let you choose Traditional (a deduction now) or Roth (tax-free qualified withdrawals later) for employee deferrals, or split between them. The $24,500 limit is shared.

For agents:

• Your tax bracket can change a lot from year to year. A $45,000 year and a $150,000 year aren’t taxed the same. Some agents lean Roth in slow years and Traditional in strong ones, deciding year by year instead of once.
• The QBI deduction. If you claim the qualified business income deduction, the IRS generally requires deductible contributions to qualified retirement plans to be taken into account when figuring QBI (IRS Form 8995 instructions). That can make the tax saving from Traditional contributions somewhat smaller than your bracket suggests. Roth deferrals aren’t deducted, so they generally don’t have this effect. The interaction depends on your full return, so ask your tax preparer.
• The 2026 Roth catch-up rule depends on your structure. Catch-up contributions generally must be Roth for participants whose prior-year FICA wages from the plan’s sponsor exceeded $150,000 (IRS Notice 2025-67). A sole proprietor with only self-employment income has no FICA wages, so the rule generally isn’t expected to apply. An S-corp owner does receive W-2 wages, so it can apply if last year’s salary from the S-corp exceeded that threshold. Confirm how your provider applies it.

Not every provider offers Roth, so check the plan document.

Solo 401(k) vs SEP IRA

For a sole proprietor, both plans use the same ~20% employer calculation. The SEP IRA has no employee deferral, which is why the Solo 401(k) allows much more at typical agent income levels. At $80,000 of net profit, it’s $14,870 vs $39,370.

The SEP IRA is simpler: it can be opened up to the filing deadline, including extensions, and has no deferral paperwork. The Solo 401(k) needs an EIN, and once plan assets exceed $250,000 at the end of a year (the IRS plan page says $250,000 or more, so file if you’re at the line), it generally requires filing Form 5500-EZ (IRS).

To reach the full $72,000 as a sole proprietor, you need about $237,500 of adjusted net earnings. As an S-corp owner, you need a $190,000 W-2 salary.

Run your own numbers with the Self-Employed Retirement Contribution Calculator, or see the full comparison in Solo 401(k) vs. SEP IRA.

Mistakes real estate agents make

• Calculating from GCI instead of net profit. Contributions start from Schedule C net profit, after the brokerage split and your business expenses.
• Using 25% instead of 20% as a sole proprietor. This overstates the employer contribution and creates an excess contribution you’ll have to correct.
• Earning a commission on your own plan’s property. If your self-directed Solo 401(k) buys real estate, you can’t act as the paid agent on that deal. Your plan also can’t buy a property that you’ll use, or buy one from you or other disqualified persons, such as your spouse, parents, children or grandchildren. These are prohibited transactions and can have serious tax consequences (IRS).
• Hiring help without checking eligibility. An employee who meets the plan’s eligibility rules, such as an assistant or transaction coordinator, can end your Solo 401(k) status. Check with your provider before you hire.
• Planning around your best month. Base contributions on realistic annual profit, not one big closing.
• Opening a SEP IRA as well to “double up.” Contributions to both plans share one $72,000 limit. See Can You Have a SEP IRA and a 401(k) at the Same Time?