How to Save for Retirement as a Solo Attorney Practice
Practical retirement savings guide for solo attorneys: SEP IRA, Solo 401(k), and more. Realistic 2026 contribution limits and steps to start this week.
Saving for retirement as a solo attorney means you are the employer, the employee, and the plan administrator. Unlike associates with firm-sponsored 401(k)s, you must choose and fund your own retirement vehicle. The good news: solo attorneys have access to plans with higher contribution limits than most employees, allowing you to shelter up to $70,000 or more annually. This guide walks you through the best options, realistic numbers for 2026, and actionable steps to implement this week.
Why Retirement Planning Is Different for Solo Attorneys
As a solo practitioner, your income may fluctuate with case flow, client payments, and business expenses. You also have no employer match, so you must be disciplined about setting aside funds. However, you have the flexibility to choose a plan that fits your cash flow, and you can often contribute more than an employee at a large firm. The key is to start early and automate contributions to avoid the temptation to spend profits.
Top Retirement Plan Options for Solo Attorneys
1. SEP IRA (Simplified Employee Pension)
A SEP IRA is the simplest plan for solo attorneys. You make contributions as the employer, and you can contribute up to 25% of your net self-employment income (after deducting half of self-employment tax) or $70,000 for 2026, whichever is less. The actual limit is indexed; for 2026, it’s estimated at $70,000. This plan is easy to set up with any brokerage, and you can vary contributions year to year. However, if you ever hire employees, you must contribute the same percentage for them, which can be costly.
Contribution example: If your net income is $100,000, the maximum contribution is 25% of $100,000 = $25,000, but you must reduce that by half of self-employment tax, so roughly $23,500. You can contribute any amount up to that limit.
2. Solo 401(k)
A Solo 401(k) is ideal for attorneys who want to save more. It allows you to contribute as both employee and employer. For 2026, the employee deferral limit is $23,500 (plus $7,500 catch-up if you’re 50 or older), and the employer profit-sharing contribution can bring the total to $70,000 (or $77,500 with catch-up). This plan requires more paperwork, but it offers higher limits and the option to take loans.
Contribution example: On $100,000 net income, you can defer $23,500 as employee, then contribute up to 25% of the remaining $76,500 as employer, which is $19,125, for a total of $42,625. That’s nearly double the SEP IRA limit.
3. Traditional or Roth IRA
If you’re just starting out or have lower income, a Traditional or Roth IRA is a simple option. The 2026 contribution limit is $7,000 ($8,000 if 50+). However, if you have a retirement plan at work (like a Solo 401(k)), your Traditional IRA deduction may be limited based on income. Roth IRAs have income limits for direct contributions, but you can use a backdoor Roth strategy. This is a good supplement to other plans, but not sufficient alone for high earners.
4. Defined Benefit Plan
For solo attorneys with consistent high income (e.g., $200,000+), a defined benefit plan (cash balance plan) allows you to contribute much more, up to the annual benefit limit, which in 2026 is $280,000 (indexed). These plans are complex and require actuarial calculations, but they offer massive tax deductions. They are best for attorneys nearing retirement who want to catch up.
Comparison Table: Solo Attorney Retirement Plans (2026)
| Plan | Contribution Limit | Setup Cost | Annual Admin Cost | Best For |
|---|---|---|---|---|
| SEP IRA | Up to $70,000 or 25% of income | $0-$50 | $0-$100 | Simple, variable income |
| Solo 401(k) | Up to $70,000 ($77,500 if 50+) | $0-$500 | $0-$200 | Max savings, no employees |
| Traditional/Roth IRA | $7,000 ($8,000 if 50+) | $0 | $0 | Starting out, supplement |
| Defined Benefit | Up to $280,000 (benefit limit) | $2,000-$5,000 | $1,000-$3,000 | High income, catch-up |
How to Choose the Right Plan for Your Practice
Consider your income stability, future hiring plans, and retirement goals. If you have no employees and want maximum flexibility, a Solo 401(k) is often the best choice. If you expect to hire staff soon, a SEP IRA might be simpler, but be aware of the equal contribution requirement. If your income is below $50,000, start with an IRA and increase savings as your practice grows. For high earners, a defined benefit plan can be a powerful tool, but consult a financial advisor or actuary.
Steps to Start Saving This Week
- Open a plan with a low-cost brokerage like Fidelity, Vanguard, or Schwab. Most offer free SEP IRA and Solo 401(k) setup. You can do this online in under an hour.
- Set up automatic transfers from your business checking account to the retirement account. For example, transfer 10% of each client payment or a fixed monthly amount, such as $1,000.
- Decide on your contribution amount for the year. Use your previous year’s net income to estimate, but you can adjust after year-end. For a Solo 401(k), you must make the employee deferral election by December 31, but employer contributions can be made until the tax filing deadline.
- Track your contributions using accounting software or a spreadsheet. Remember to deduct contributions on your tax return.
- Review your plan annually to ensure you’re on track. As your income grows, increase contributions to hit the maximum.
FAQ
Can I have both a Solo 401(k) and an IRA?
Yes, you can have both, but the combined contribution limits apply. For 2026, you can contribute $23,500 to a Solo 401(k) as employee, plus $7,000 to an IRA, but the IRA deduction may be limited if your income is high. Consider a Roth IRA or backdoor Roth for tax-free growth.
What if I hire an employee later?
If you hire a non-spouse employee, a Solo 401(k) may become a regular 401(k) with additional compliance requirements. A SEP IRA requires you to contribute the same percentage for eligible employees. Plan ahead: if you expect to hire, consider a SIMPLE IRA, which has lower limits but fewer obligations.
How do I calculate my net self-employment income for contributions?
Your net income is your business profit minus half of self-employment tax. For example, if your profit is $120,000, your self-employment tax is roughly $16,800, so half is $8,400. Your net income for retirement contribution purposes is $111,600. Use that figure for percentage calculations.
Is it better to contribute to a Traditional or Roth account?
It depends on your current tax bracket versus your expected bracket in retirement. If you’re in a high bracket now, Traditional contributions reduce current taxes. If you expect to be in a higher bracket later, Roth contributions (after-tax) may be better. Many solo attorneys diversify by contributing to both.
The Bottom Line
Saving for retirement as a solo attorney is not optional; it’s a critical part of running a sustainable practice. Start with a Solo 401(k) if you can, as it offers the best balance of high limits and flexibility. Set up automatic contributions this week, even if small, and increase them as your income grows. Review your plan annually and adjust for tax law changes. With discipline, you can build a substantial nest egg while reducing your tax bill. Don’t delay: the earlier you start, the more time compound growth works for you.