Solo 401(k) for Physicians: The $72,000 Retirement Account for 1099 Doctors

If you have any self-employment income as a physician — locum tenens shifts, a private practice, independent contractor arrangements, or side consulting work — you can open a solo 401(k) and shelter up to $72,000 in 2026.¹ That's the same contribution ceiling available to large companies with hundreds of employees, available to you as a one-person business. For a physician in the 37% federal bracket, maxing it out saves roughly $26,600 in federal income taxes in a single year — before state income tax savings.

This guide explains how the solo 401(k) works for physicians specifically: the two-part contribution mechanics, what happens if you also have a hospital 401(k) or 403(b), when Roth makes sense, and how to stack a solo 401(k) with a cash balance plan if you want to shelter significantly more.

Who Qualifies for a Solo 401(k)

A solo 401(k) — also called an individual 401(k), owner-only 401(k), or self-employed 401(k) — is available to any business owner with no full-time employees other than themselves (and their spouse). Qualifying earned income sources for physicians include:

• 1099-NEC or 1099-MISC income from locum tenens agencies, hospital systems contracting you as an independent physician, or telemedicine platforms
• Sole proprietorship income from a cash-pay or concierge practice, direct billing, or consulting work
• PLLC / single-member LLC income where you have self-employment income (not just passive distributions)
• S-corp W-2 salary paid to yourself from your own medical practice entity (the S-corp acts as the plan sponsor)

If you have support staff working more than 1,000 hours per year, they generally must be covered under the plan, which changes the economics significantly. For true solo work — common for locum tenens physicians and single-provider practices — the owner-only 401(k) is the right vehicle.

The Two-Part Contribution: Employee Deferral + Employer Profit Sharing

This is the most misunderstood aspect of the solo 401(k). Unlike a SEP-IRA (which has only an employer contribution), a solo 401(k) has two separate contribution buckets. You wear both hats — employee and employer — so you can fill both.

Part 1: Employee salary deferral

As the "employee," you can defer up to $24,500 in 2026 of your earned income into the plan — the same as a W-2 employee at a large corporation.¹ This limit is shared across all of your 401(k)-type plans for the year. If your hospital 403(b) already captured $20,000 in deferrals, you can only put $4,500 more in employee deferrals to your solo 401(k).

Age-based catch-up contributions increase the employee deferral ceiling:

• Ages 50–59 and 64+: +$8,000 catch-up → employee deferral up to $32,500
• Ages 60–63: +$11,250 SECURE 2.0 super catch-up → employee deferral up to $35,750

Part 2: Employer profit sharing

As the "employer," you can make an additional profit-sharing contribution. The formula differs by business structure:

• Sole proprietor / single-member LLC: Up to 20% of your net self-employment income (after the ½ SE tax deduction). Net SE income = gross SE income × 0.9235.
• S-corp: Up to 25% of your W-2 salary paid by the S-corp, capped at the $360,000 compensation limit.²

The employer contribution is a deductible business expense — it reduces income tax and, for sole proprietors, the self-employment tax calculation base. This is part of why the S-corp election matters at high 1099 income levels: see the S-corp tax savings calculator for the combined picture.

2026 Solo 401(k) Contribution Calculator

Enter your income, business structure, and age to estimate your maximum solo 401(k) contribution for 2026 — including the impact of any deferrals you've already made to a hospital plan.

2026 limits at a glance by age

2026 limits per IRS Notice 2025-67 (IR-2025-244).¹ Compensation limit $360,000. "Max employer PS" assumes a physician at or above the income level where the §415(c) cap — not the profit-sharing formula — is the binding constraint.

If You Also Have a Hospital W-2

This is the question that trips up most physicians with a hospital job plus locum or side-practice income: can you still use a solo 401(k) if your hospital plan already took contributions?

Yes — and the answer is more favorable than most physicians realize. Here's exactly how it works:

Employee deferrals are aggregated across employers for the same individual. The $24,500 employee deferral limit is yours personally — it applies across all 401(k)-type plans you participate in for the same tax year. If your hospital 403(b) captured $20,000 in deferrals, you have only $4,500 left for employee deferrals to your solo 401(k).

Employer profit sharing has its own §415(c) limit per employer. Your solo 401(k)'s employer profit-sharing contribution is completely separate from whatever your hospital employer contributed to your behalf. Each plan has its own $72,000 §415(c) ceiling. The hospital's contributions do not reduce your solo 401(k) employer PS room.

At higher 1099 income levels, the employer profit-sharing bucket alone can reach $47,500+ (20% × $237,500 net SE income = $47,500). Combined with any remaining employee deferral headroom, many physicians with a W-2 hospital job can still contribute $50,000–$72,000 to a solo 401(k) on their side income.

See the locum tenens financial planning guide for more on managing the combined tax picture of a hospital W-2 and 1099 locum income, and the S-corp calculator for modeling the S-corp election on the 1099 side.

Roth vs. Traditional Solo 401(k)

Most major custodians now offer a Roth option for the employee deferral component. (The employer profit-sharing contribution always goes in pre-tax — there is no Roth employer contribution.) The Roth vs. traditional decision for physicians:

For most attending physicians in the 37% bracket, traditional pre-tax contributions make sense. The exception: physicians accumulating very large deferred balances (403(b) + 457(b) + solo 401(k)) who face significant RMDs at 73 or 75 may want to direct some contributions to Roth to reduce future IRMAA surcharges. See the IRMAA physician planning guide for the full analysis, and the backdoor Roth guide for the standard strategy most attending physicians use for their IRA contributions.

Stacking with a Cash Balance Plan

The solo 401(k) gets you to $72,000. For a physician netting $350,000–$600,000+ as a practice owner or locum, there is still a large amount of taxable income left after the 401(k) ceiling. A cash balance defined benefit plan stacks on top and can shelter another $100,000–$300,000+ per year depending on age.

For a 52-year-old physician netting $450,000:

• Solo 401(k) (age 50+ catch-up): $80,000
• Cash balance plan contribution: ~$150,000–$200,000 (actuarially calculated for age 52, targeting retirement at 65)
• Combined: ~$230,000–$280,000 sheltered before tax
• Federal tax savings at 37%: ~$85,000–$104,000 per year

The cash balance plan requires an enrolled actuary and an annual Form 5500 filing (~$2,500–$5,000/year in admin costs). At $150,000+ in annual contributions, the administrative cost is trivial relative to the tax savings. See the cash balance plan guide for contribution ranges by age and the employee coverage rules if you have part-time staff.

Adoption Deadline and Setup Logistics

The most commonly missed detail: a solo 401(k) plan must be established (plan documents signed) by December 31 of the tax year for which you want to make contributions. You cannot open a plan in February and retroactively apply it to the prior year — unlike a SEP-IRA, which can be opened as late as your extended tax filing deadline.

Once the plan is in place, you have until your tax filing deadline (including extensions — typically October 15 for Form 1040 filers) to actually fund the contributions. So the rule is: establish before December 31, fund by October 15 of the following year.

For physicians starting a new 1099 income stream mid-year: if you earn your first locum or side-practice income in 2026 and establish the plan before December 31, 2026, you can contribute based on all your 2026 self-employment income. Don't wait until tax season to act — by then it's too late to open the plan for that year.

Custodian Options

Several custodians offer solo 401(k) plans with no annual fees. The main practical differences are Roth availability and loan provisions:

For most physicians, Fidelity or Schwab is the simplest and cheapest option — no annual fees, Roth available, broad investment menu. A third-party TPA makes sense if you need loan provisions or non-standard investment options (e.g., private placements, real estate). The loan option is rarely used in practice; physician income is high enough that most don't need to borrow from a retirement account.

Common Questions

Can I have a solo 401(k) and a backdoor Roth IRA?

Yes. A solo 401(k) doesn't affect your ability to do a backdoor Roth IRA. In fact, the solo 401(k) helps you avoid the backdoor Roth's pro-rata trap: if you have a traditional IRA with a pre-tax balance, rolling it into your solo 401(k) clears the pro-rata calculation for a clean backdoor conversion. This is one of the most useful but least-known interactions between the two accounts.

Solo 401(k) vs. SEP-IRA: which should a physician use?

The solo 401(k) almost always wins. The SEP-IRA only has the employer contribution bucket — up to 25% of W-2 compensation (or 20% of net SE income), same as the solo 401(k) employer contribution. But to reach $72,000 in a SEP-IRA, you need $288,000+ in W-2 compensation. With a solo 401(k), you reach $72,000 at a lower income level because the employee deferral adds $24,500 on top of the employer bucket. The SEP's only advantages are simpler paperwork and a later opening deadline — advantages that rarely outweigh the higher contribution room.

What if my income varies significantly year to year?

The employer profit-sharing contribution is entirely discretionary — you don't have to make it in a bad year. The plan stays in force with $0 employer contributions in lean years. Employee deferrals are elected prospectively (before the income is received), so you can adjust your deferral percentage at any time for future pay periods. This flexibility makes the solo 401(k) particularly well-suited to physicians with variable locum schedules or fluctuating practice income.

Can my spouse contribute to the same plan?

If your spouse provides genuine services to the business (e.g., administrative work in your practice), they can participate in the plan under their own deferral and employer contribution limits. This can effectively double the household's contribution room — up to $144,000 combined (two fully maxed $72,000 plans) for a physician couple sharing self-employment income. The plan documents must cover the spouse as an employee of the business.

Does the solo 401(k) reduce my self-employment tax?

Employee salary deferrals do not reduce self-employment tax — SE tax is calculated on net SE earnings before the deferral. Employer profit-sharing contributions, however, are a deductible business expense that reduces Schedule C net income, which lowers both income tax and the SE tax base. For S-corps, the profit-sharing contribution reduces W-2 payroll (which is FICA-taxed anyway), while the remaining S-corp distributions were never subject to SE tax. See the S-corp savings calculator for the combined SE tax + income tax picture.

What happens to my solo 401(k) if I join a large practice or hospital system?

The plan stays open as long as you have eligible self-employment income. If you stop all self-employment income and join a W-2-only employer, you can no longer make new contributions, but the existing balance continues to grow tax-deferred. You can also roll the balance into a new employer's 401(k) or into a traditional IRA at any time. There's no urgency to close the account — it simply goes dormant until you either resume SE income or decide to roll it elsewhere.