Why Self-Employed Dentists Are Replacing the SEP IRA With a Solo 401(k) and Saving Up to $23,000 More Per Year

1 hour ago 2

David Beren

Sat, April 11, 2026 astatine 8:58 AM CDT 6 min read

A Solo 401(k) allows self-employed dentists to lend astir $51,000 annually compared to $28,000 with a SEP IRA, creating astir $23,000 successful further tax-deferred savings per twelvemonth and reducing the yearly taxation measure by astir $7,360 for those successful the 32% national bracket.
The Solo 401(k) is the lone existent enactment for dentists to marque Roth contributions and execute a Mega Backdoor Roth strategy, enabling tax-free maturation and income power for those readying signifier income that would different trigger Social Security taxation and Medicare surcharges.
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A self-employed dentist with a nett Schedule C nett of $150,000 and a SEP IRA is leaving astir $23,000 successful tax-deferred savings connected the array each year. The Solo 401(k) closes that spread and, for dentists who expect a ample signifier merchantability astatine retirement, besides offers a way astir 1 of the astir costly taxation traps successful status planning.

The SEP IRA lone permits leader contributions. For a self-employed dentist, that means 25% of nett self-employment income, which works retired to astir 20% aft the self-employment taxation deduction, oregon astir $28,000 connected $150,000 of nett profit. The mathematics is simple, and the ceiling arrives quickly.

The Solo 401(k) operates differently. As some leader and employee, the dentist tin marque contributions successful some roles. The IRS allows a Solo 401(k) subordinate to marque contributions successful some the worker and leader roles, enabling a higher combined publication than the SEP IRA permits. For 2026, the worker deferral bounds unsocial is $24,500, and the leader profit-sharing information adds up to 20% of your adjusted nett self-employment income connected apical of that. At $150,000 of nett Schedule C income, the combined full reaches astir $51,000, compared to $28,000 nether the SEP IRA. That is astir $23,000 much per twelvemonth directed into a tax-deferred account.

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For a dentist successful the 32% national bracket, $23,000 successful further pre-tax contributions reduces the existent twelvemonth taxation measure by astir $7,360. Over a decade, that further sheltered superior compounds without yearly taxation drag.

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