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No 401(k)? How to save for retirement

Key takeaways

  • Freelancers and independent contractors have some of the same retirement plan options as small-business owners, including the IRA, SEP IRA, SIMPLE IRA, self-employed 401(k), Fidelity Advantage 401(k)SM, and HSAs.

The pandemic forced many people to take on side jobs to fill in the income gap left by furloughs and unemployment caused by COVID-19. If you are one of the millions of freelancers, entrepreneurs, or workers with a side gig—or an employee with no workplace retirement plan—you can still save for retirement. As long as you have some earnings, you have some tax-advantaged saving options.


You've probably heard of IRAs, short for individual retirement arrangements, which are also commonly called individual retirement accounts. Anyone with earned income (including those who do not work themselves but have a working spouse) can open an IRA. There are a couple different options, Roth and traditional. Each may offer tax benefits.

To find out more about IRAs, read Viewpoints on Traditional or Roth account? 2 tips to choose and Traditional or Roth IRA, or both?, or take a quiz.


If you are self-employed or have income from freelancing, you can open a Simplified Employee Pension plan—more commonly known as a SEP IRA.

Who can open one? The SEP IRA is available to sole proprietors, partnerships, C-corporations, and S-corporations.

How it works Contributions to a SEP IRA may potentially be tax-deductible. If you have employees, you have to set up accounts for those who are eligible. Generally speaking, employees cannot contribute to the account; the employer makes all the contributions. The exception would be if the plan permits employees to make regular traditional IRA contributions including catch-ups to the account. These non-SEP contributions would then count toward the annual limit for IRAs since they were not made by the employer.

Contribution caps for SEP IRAs can vary each year between 0% and 25% of compensation, with adjustments for the deductible portion of self-employment taxes and the owner's own retirement account contributions, up to a maximum of $66,000 in 2023 and $69,000 in 2024. Each eligible employee must receive the same percentage of their eligible compensation as a contribution.

Note that the rules on determining eligible compensation, which are different for self-employed and employee SEP participants, can be complex. Consult a tax expert or the IRS website for details.

Who it may help

This account works well for freelancers and solo entrepreneurs, and for businesses with employees (as long as the owners don't mind making the same percentage contribution for the employees that they make for themselves). The SEP IRA is generally easy and inexpensive to set up and maintain.

Things to keep in mind The deadline to set up and fund the account is the federal income tax filing deadline.

Self-employed 401(k)

A self-employed 401(k), also known as a solo 401(k), can be an option for maximizing retirement savings even if you're not making a lot of money.

Who can open one? If you are self-employed or own a business or partnership with no employees you can open a self-employed 401(k). A spouse who works in the business can participate as well.

How it works You get 2 opportunities for contributing to a self-employed 401(k)—first as the employee, and again as the employer.

As the employee, you can choose to make a tax-deductible or Roth contribution of up to 100% of your compensation, with a maximum of $22,500 in 2023 and $23,000 in 2024. Once you're over age 50, you can also make catch-up contributions—for both 2023 and 2024, you can save an extra $7,500, for a total of $30,000 and $30,500, respectively.

As the employer, you can contribute up to 25% of your eligible earnings. The employer contribution is always made before tax. (Similar adjustments as needed for a SEP IRA contribution limit are needed to determine the employer portion of the solo 401(k) contribution limit. Consult a tax expert or the IRS website for details on computing eligible earnings.)

Who it may help These accounts give small business owners the opportunity to save a significant amount of money each year. The total that can be contributed for employee and employer is $66,000 in 2023 and $69,000 in 2024, plus an additional $7,500 in both years for people age 50 and over.

Things to keep in mind After the plan assets hit $250,000, you have to file Form 5500 with the IRS.

The deadline for setting up the plan is the employer's tax filing deadline. Similarly, both employer and employee can make contributions to the account until your business' tax-filing deadline for the year, including extensions. 


Like a 401(k), this account offers tax-deferral and pretax contributions, plus an employee contribution and an employer match.

Who can open one? Anyone who is self-employed or a small-business owner can open a SIMPLE IRA. Small businesses with 100 employees or fewer can also open a SIMPLE IRA plan.

How it works Like the self-employed 401(k), you get 2 chances to contribute.

  • As the employee, you can contribute up to 100% of your compensation, up to $15,500 in 2023 or $16,000 in 2024. Starting in 2024, this limit is 10% higher for eligible plans.1
  • As the employer, you must either put in a 3% matching contribution or a 2% nonelective contribution. The latter is not contingent on the employee contribution, the way a matching contribution to a 401(k) typically is. Starting in 2024, the employer may also make a uniform non-elective contribution to all employees of the lessor of 10% of compensation or $5,000.

But be aware that a SIMPLE IRA can require the employer to make contributions to the plan even if the business has no profits.

Who it may help The SIMPLE IRA is an inexpensive plan for businesses with fewer than 100 employees. It also allows for salary deferrals by employees.

The SIMPLE IRA also allows those age 50 and over to save an additional $3,500 in both 2023 and 2024.

Things to keep in mind The deadline to set up the plan is typically October 1. You can make matching and nonelective contributions until the company's tax filing deadline—including extensions.

Fidelity Advantage 401(k)SM

This 401(k) is Fidelity’s pooled employer plan (PEP). It can help maximize retirement savings for growing small businesses while offering a simple plan design and fewer administrative responsibilities.

Who can open one? Anyone who owns a growing small business and wants to start a 401(k) for the first time.

How it works As the plan sponsor and fiduciary of Fidelity Advantage 401(k), Fidelity handles many of the day-to-day operational responsibilities and investment management duties.

Fidelity has designed this to be a Safe Harbor 401(k) plan, which means:

  • As the employer, you will agree to match dollar for dollar up to the first 3% of an employee’s annual compensation contributed to the plan, and 50 cents per dollar for the next 2%, which will be paid every pay period. These contributions are generally tax-deductible.
  • Employees may contribute up to $22,500 for 2023 ($30,000 if 50 or older) and $23,000 for 2024 ($30,500 if 50 or older).
  • The total employer and employee contributions cannot exceed $35,700 ($43,200 if 50 or older) for 2023 and $36,800 ($43,300 if 50 or older) in 2024.2
  • Employers can automatically bypass some of the year-end testing that is required with a traditional 401(k) plan.

Fidelity Advantage 401(k) also features a streamlined plan design with a simplified investment lineup and pre-determined employee eligibility.

Who it may help Due to higher contribution limits, Fidelity Advantage 401(k) is ideal for small business owners who want to start a 401(k) to maximize their retirement savings. While a self-employed 401(k) is only available to a business owner and spouse, this plan is ideal for business owners who currently employ or plan to grow up to 100-150 employees.

Things to keep in mind October 1 is the last available start date for the plan each year.

Consider a health savings account

Another option to consider is a health savings account (HSA). If you have an HSA-eligible health plan, these accounts offer a number of benefits, including a tax deduction, tax-free growth potential, and tax-free withdrawals to pay for qualified medical expenses—either now or in retirement.3

After age 65, if you don’t need the money for health care costs, you can take withdrawals from the account penalty-free. But, similar to a traditional IRA, taxes on contributions and earnings will be due.

Time is one of the most important factors when it comes to building up your retirement fund. While you're young, time is on your side. Don't let the absence of a workplace retirement plan like a 401(k) stand in your way. There are plenty of other retirement savings options—pick a plan and start saving and investing.

Is an IRA right for you?

We can help you decide whether you might want a traditional, Roth, or rollover IRA.

More to explore

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Recently enacted legislation made a number of changes to the rules regarding defined contribution, defined benefit, and/or individual retirement plans and 529 plans. Information herein may refer to or be based on certain rules in effect prior to this legislation and current rules may differ. As always, before making any decisions about your retirement planning or withdrawals, you should consult with your personal tax advisor.

1. An eligible plan is a plan with no more than 25 employees. For plans with 26 or more employees, the plan must either elect a 4% matching contribution or a 3% non-elective contribution to allow the increased employee deferral limit. 2. Represents the contribution limits for Fidelity Advantage 401(k) based on the Safe Harbor match. With a Safe Harbor match, employers make matching contributions up to 4% of eligible compensation of participating employees, which is based on a standard contribution formula. 3.

With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917