Retirement Accounts for 1099 Clinicians: Solo 401(k) vs SEP IRA vs Defined Benefit

The Opportunity Most Clinicians Miss

As a W2 employee, your retirement options were limited. Your employer chose the plan, set the match, and capped your contributions at $23,500 (2025 limit) plus whatever match they offered.

As a 1099 clinician, you control the plan. And the contribution limits are dramatically higher. A Solo 401(k) allows up to $70,000 annually. A defined benefit plan can exceed $200,000. These contributions reduce your taxable income dollar-for-dollar, which means they also reduce your self-employment tax base.

Retirement planning is not just about saving for the future -- it is one of the most powerful tax reduction tools available to self-employed clinicians right now.

Solo 401(k): The Best Starting Point

Also called an Individual 401(k) or One-Participant 401(k), this plan is designed for self-employed individuals with no full-time employees (except a spouse).

Contribution structure:

• Employee contributions: up to $23,500 (2025), or $31,000 if over age 50
• Employer contributions: up to 25% of net self-employment income (after the SE tax deduction)
• Combined limit: $70,000 ($77,500 over 50)

Key advantages:

• Highest combined contribution limits for most income levels
• Roth option available (contribute after-tax dollars, grow and withdraw tax-free)
• Loan provision (borrow up to $50,000 from your own plan)
• No required minimum distributions (RMDs) if you are still working (for Roth 401(k))

Administration: Simple to set up and maintain at Fidelity, Schwab, or Vanguard. No annual filing required if plan assets are under $250,000. Once assets exceed $250,000, you file Form 5500-EZ annually.

Best for: Most 1099 clinicians. It is the default recommendation unless your specific situation calls for something different.

SEP IRA: Simpler but More Limited

A Simplified Employee Pension IRA requires less paperwork than a Solo 401(k) but has meaningful limitations.

Contribution structure:

• Employer contributions only: up to 25% of net self-employment income
• Maximum: $70,000 (2025)
• No employee contribution component
• No catch-up contributions for those over 50

Key advantages:

• Easiest to set up and administer (can be opened and funded on the same day, even at tax deadline)
• No annual filing requirements regardless of asset level
• Flexible contributions (you choose how much to contribute each year)

Limitations:

• No Roth option
• No loan provision
• Lower effective contribution for clinicians earning under $280,000 (since it is 25% of net only)
• If you hire employees, you must contribute the same percentage for them

Example comparison at $200,000 net SE income:

• Solo 401(k): $23,500 (employee) + $37,000 (employer at 25% of adjusted net) = $60,500
• SEP IRA: $37,000 (25% of adjusted net) -- $23,500 less

Best for: Clinicians who want simplicity, are opening a plan at tax time, or are unsure about committing to annual contributions.

Defined Benefit Plan: Maximum Tax Shelter

Defined benefit plans (traditional pension plans) allow the largest contributions of any retirement vehicle -- potentially exceeding $200,000 annually depending on your age and plan design.

How it works: An actuary calculates the annual contribution required to fund a specific retirement benefit (e.g., $100,000/year starting at age 65). Older participants need larger annual contributions to reach the target, which is why this plan benefits clinicians over 40 most.

Contribution ranges by age:

• Age 35: approximately $50,000-$80,000/year
• Age 45: approximately $80,000-$150,000/year
• Age 55: approximately $150,000-$250,000/year

Key advantages:

• Highest contribution limits of any retirement plan
• All contributions are tax-deductible
• Contributions are mandatory (which can be an advantage for discipline)

Limitations:

• Requires an actuary to design and maintain ($1,500-$3,000/year)
• Annual contributions are mandatory once the plan is established
• Less flexibility -- you must contribute the calculated amount each year
• Must be funded by the tax filing deadline
• Complex to terminate if income drops

Best for: Clinicians over 40 earning consistently above $300,000 who want to maximize tax deferral and have stable, predictable income.

Stacking Plans

You can combine a Solo 401(k) or SEP IRA with a defined benefit plan, effectively doubling your tax-deferred savings.

Common stack: Solo 401(k) ($70,000) + Defined Benefit Plan ($150,000) = $220,000 in tax-deferred retirement savings in a single year.

At a 37% marginal federal rate plus 5-10% state, that $220,000 contribution saves $92,400-$103,400 in taxes. The math is compelling for high earners.

Quick Decision Framework

Net SE income under $100K: Solo 401(k). Maximize employee contributions first.

Net SE income $100K-$300K: Solo 401(k) with full employee + employer contributions.

Net SE income $300K+, under age 40: Solo 401(k) maxed out. Consider defined benefit if income is stable.

Net SE income $300K+, over age 40: Solo 401(k) + defined benefit plan. The combined tax savings are significant.

Just want simplicity: SEP IRA. Open one today, contribute what you can.

CCA members connect with financial advisors who specialize in 1099 clinician retirement planning. Learn more.