Interactive Brokers (IBKR) SEP IRA vs. Solo 401k: 2026 Review

For solopreneurs choosing between the Interactive Brokers (IBKR) SEP IRA and a Solo 401k, the headline numbers look identical for 2026: both plans share a $72,000 contribution ceiling. But that surface-level parity hides a major gap. The way each plan actually gets you to $72,000—and whether you can go beyond it—creates a meaningful difference for small business owners. This 2026 review breaks down the contribution mechanics, the Mega Backdoor Roth, catch-up contributions, participant loans, real estate investing, and the tax credits available with the Solo 401k.

The $72,000 Question: Same Limit, Very Different Mechanics

On the surface, both the IBKR SEP IRA and the Solo 401k share the same $72,000 contribution ceiling for 2026. But the income required to actually reach that ceiling is dramatically different, and only the Solo 401k allows contributions above $72,000 through catch-up buckets for those age 50+.

SEP IRA Contribution Mechanics (Including the IBKR SEP IRA)

The SEP IRA only allows one type of contribution: an employer contribution. That contribution is limited to a percentage of your self-employment compensation, and the percentage depends on how your business is taxed.

If Your Business Is Taxed as an S-Corp or C-Corp

Self-employment compensation equals the W-2 wages you receive from the S-Corp or C-Corp. The employer contribution limit is up to 25% of those W-2 wages.

If Your Business Is Taxed as a Sole Proprietorship or Partnership

Self-employment compensation equals:

• Sole prop / single-member LLC taxed as sole prop: Line 31 of Schedule C, less one-half of self-employment tax.
• Partnership: Line 14 of the K-1 received from the partnership, less one-half of self-employment tax.

The employer contribution is limited to 20% of that self-employment compensation.

Solo 401k Contribution Mechanics: Multiple Buckets

With a Solo 401k, the IRS treats you as both the employee and the employer. That opens up multiple contribution buckets:

Employee Contributions

For 2026, the employee contribution limit is 100% of self-employment compensation up to $24,500 (assuming you don’t make employee contributions to another plan, such as a day-job 401k).

Employer Contributions

On top of the employee contribution, you can also make the same employer contribution you could have made to a SEP IRA (25% of W-2 wages or 20% of self-employment compensation, depending on entity type).

Mega Backdoor Roth

With as little as $72,000 of self-employment compensation, you can contribute the full $72,000 as a Mega Backdoor Roth contribution. That kind of velocity is not possible with a SEP IRA.

Catch-Up Contributions: Solo 401k Only

Catch-up contributions allow individuals age 50+ to contribute above the standard limits. They are a type of employee contribution—so they apply to the Solo 401k but not to the SEP IRA, including the IBKR SEP IRA.

• Standard catch-up (age 50+): An additional $8,000 in 2026.
• Super catch-up (age 60–63 as of year-end 2026): An additional $11,250 in 2026 (instead of $8,000).

That means a Solo 401k participant age 60–63 as of the end of 2026 can contribute up to $83,250 total—an amount the SEP IRA simply cannot match.

2026 Contribution Limit Comparison

Income Required to Reach $72,000 (Sole Prop Example)

Interactive Brokers Specifics

Interactive Brokers is a popular brokerage choice among our customers who set up a Solo 401k through My Solo 401k Financial. IBKR does not offer its own Solo 401k document, so to use IBKR for a Solo 401k you bring an outside plan document—such as the one provided by My Solo 401k Financial—and open the brokerage account in the name of the Solo 401k trust.

Roth, Participant Loans, and Real Estate

Roth and Mega Backdoor Roth

The My Solo 401k Financial plan fully supports Roth contributions and the Mega Backdoor Roth. No SEP IRA—including the IBKR SEP IRA—allows Roth contributions or the Mega Backdoor Roth strategy.

Participant Loans

A Solo 401k participant can borrow up to 50% of the account balance, not to exceed $50,000. Participant loans are not available with any IRA, including the IBKR SEP IRA.

Real Estate & Leverage (UDFI)

Both plans can technically invest in real estate (the SEP IRA would need to be held at a self-directed IRA provider, not IBKR). When debt is used, both require non-recourse financing, which typically requires around 50% down. The key difference is the tax treatment of leveraged real estate income:

• SEP IRA + leverage: Income is subject to UDFI (Unrelated Debt-Financed Income) tax.
• Solo 401k + leverage: An exception applies, so a Solo 401k investing in real estate subject to acquisition indebtedness is not subject to UDFI.

SECURE Act Tax Credits: $1,500 for Solo 401k Plans

Setting up a Solo 401k through My Solo 401k Financial enables eligible solopreneurs to claim $1,500 in tax credits under the SECURE Act—$500 per year for three consecutive years. To trigger eligibility, the Solo 401k plan must include an auto-enrollment feature, which establishes a default 3% contribution percentage. The solopreneur, as participant, has the right to opt out of that default and contribute on whatever schedule or amount they prefer—preserving all of the Solo 401k’s contribution flexibility.

Because this is a credit (a dollar-for-dollar reduction in tax liability), it more than offsets our fees for the first seven-plus years. Our pricing: a $525 establishment fee plus a flat $125 annual fee that doesn’t scale with account value. SEP IRAs—including the IBKR SEP IRA—are not eligible for these tax credits.

Head-to-Head: IBKR SEP IRA vs. Solo 401k (2026)