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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. 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.

IRA

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 Fidelity.com: Traditional or Roth account? 2 tips to choose and Traditional or Roth IRA, or both?, or take our quiz.

SEP IRA

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 business of all sizes, including sole proprietors, partnerships, C-corporations, and S-corporations.

How it works Contributions to a SEP IRA are tax-deductible. If you have employees, they must set up their own accounts in order to participate. Generally speaking, employees cannot contribute to the account; the employer makes all the contributions. The exception would be that account owners/employees can make traditional IRA contributions into their SEP IRA if they would like. 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 $70,000 in 2025. 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 for the business, with extensions as applicable.

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 (other than your spouse), you can open a self-employed 401(k). If you employ your spouse, they can participate as well.

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

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 $23,500 in 2025. If you will turn age 50 or older by the end of the calendar year, you can also make catch-up contributions. For 2025, those who will turn age 50-59 or 64 or older by the end of the calendar year can save up to an extra $7,500, for a max of $31,000. That catch-up contribution limit increases to $11,250 for those who will turn age 60-63 by the end of the calendar year, for a max contribution of up to $34,750.1

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 combined is $70,000 in 2025, plus applicable catch-up amounts.

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

The deadline for setting up the plan is the employer's tax filing deadline, plus extensions. Similarly, the employer can make contributions to the employee's account until the business' tax-filing deadline for the year, including extensions. However, to be able to make both the employee AND employer contributions, employers must have opened their plans and employees must have made their deferral elections by the end of the calendar year they are contributing for.

SIMPLE IRA

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

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

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

  • As the employer, you must either put in a 3% matching contribution or a 2% nonelective contribution. Employers with 26-100 employees can choose up to a 4% match or 3% nonelective contribution. The nonelective contribution is not contingent on the employee contribution, the way a matching contribution to a 401(k) typically is. The employer may also make an additional uniform, nonelective contribution to all employees of the lessor of 10% of compensation or $5,000.
  • As the employee, you can defer up to 100% of your compensation, up to $16,500 in 2025. This limit is 10% higher for eligible plans, up to $17,600. 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.
  • The SIMPLE IRA also allows all employees who will be age 50-59 or 64 or older by the end of the calendar year to make a catch-up contribution of up to $3,500 ($3,850 for employees eligible to defer the extra 10%). For employees turning age 60-63 by the end of the calendar year, that amount increases to a limit of $5,250.

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.

Things to keep in mind The deadline to set up the plan is typically October 1. You can make matching or 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? For-profit employers with up to 1,000 employees who wants to offer 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:

  • Employers 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 who will be under age 50 at the end of the calendar year may contribute up to $23,500 in 2025. If you'll be age 50-59 or 64 or older at the end of the calendar year, you're eligible to make an additional catch-up contribution of up to $7,500. Those turning age 60-63 by the end of the calendar year are eligible to contribute up to $11,250 as a catch-up contribution. This means those who will be 50-59 or 64 or older at the end of the calendar year will be able to contribute up to $31,000 in 2025, and those who will be 60-63 will be able to contribute up to $34,750.
  • For 2025, the total employer and employee contributions cannot exceed $37,500 for those 49 and younger, $45,000 for those 50-59 and 64 or older, and $48,750 if age 60-63.2
  • 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 Fidelity Advantage 401(k) may be right for business owners who want to start a 401(k) to maximize their own retirement savings, take advantage of potential tax benefits, or attract and retain top talent with a competitive benefit. 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 1,000 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-deferred 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. Withdrawals for non-health care costs before age 65 may incur a penalty of 20% in addition to income taxes.

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.

1. Starting in 2026, Section 603 of SECURE 2.0 requires a 401(k) plan to require catch-up contributions to be made on a Roth basis for any plan participant that makes in excess of $145,000 as of 2025. 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 IRS.gov. 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.

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