Contributions to both SEP IRA and Solo 401k

Does the IRS allow contributions to both SEP IRA and Solo 401K in the same year?

Yes, you may contribute into the SEP IRA and Solo 401k in the same year, but you cannot exceed the contribution limits in total.

• The Solo 401k is more advantageous
• The Solo 401k allows you to maximize your contributions since it allows you to contribute through both the employee salary deferral and the employer profit sharing component
• The SEP IRA only has the profit sharing component
• Most individuals will stop utilizing the SEP IRA once they establish the Solo 401k since the SEP IRA does not offer additional benefits and can add complexity from the administrative and accounting perspective
• The SEP IRA can be rolled over into the Solo 401k