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A 401(k) is a popular way to save for retirement. But not everyone has these employer-sponsored savings plans. For instance, many small companies don’t offer 401(k)s. And self-employed individuals don’t have access to regular 401(k)s.
For those who don’t have access to a 401(k) at work or want to consider other retirement savings options, there are a number of 401(k) alternatives. Read on to learn about how to save for retirement without a 401(k), some 401(k) alternatives, and what you need to know about each of them to choose a plan that aligns with your retirement savings goals.
Key Points
• Alternatives to a 401(k) include traditional IRAs, which allow contributions to grow tax-deferred, with funds taxed upon withdrawal at age 59½ or later.
• Roth IRAs are funded with after-tax dollars, meaning qualified distributions in retirement are tax-free, and there are no required minimum distributions (RMDs).
• Self-directed IRAs expand investment options beyond stocks and bonds and may include alternative assets such as real estate investment trusts, precious metals, and private equity.
• SEP IRAs allow small business owners or self-employed individuals to contribute up to 25% of an employee’s salary.
• Solo 401(k)s are designed for self-employed individuals and business owners with no employees other than a spouse.
5 Alternatives to a 401(k)
These are some popular retirement savings plans that are available beyond a regular 401(k) that individuals may want to consider.
Traditional IRA
A traditional IRA (Individual Retirement Account) is similar to a 401(k) in that contributions are not included in an individual’s taxable annual income. Instead, they are deferred and taxed when the money is withdrawn at age 59 ½ or later.
Early withdrawals from an IRA (before age 59 ½) may be subject to an added 10% penalty (plus income tax on the distribution). However the main difference between an IRA vs. 401(k) is that IRAs tend to give individuals more control than employer-sponsored plans. For example, IRAs typically have more investment options than 401(k)s, so an individual can decide for themselves how and where to invest their money.
Learning how to open an IRA is relatively simple — these accounts are available through a variety of financial services providers, including online banks and brokerages. This flexibility allows individuals to comparison shop, evaluating providers based on criteria such as account fees and other factors.
Once an individual opens an account, they may make contributions up to an annual limit at any time prior to the tax filing deadline. For tax year 2026, the limit is $7,500 ($8,500 for individuals 50 and older).
Roth IRA
There are a few key differences when it comes to a traditional IRA vs. a Roth IRA. To begin with, not everyone qualifies to contribute to a Roth IRA. The upper earnings limit to contribute even a reduced amount for tax year 2026 is $168,000 for singles, and $252,000 for married joint filers.
Another thing that distinguishes Roth IRAs from traditional IRAs is that they’re funded with after-tax dollars — meaning that while contributions are not tax deductible, qualified distributions (typically after retirement) are tax-free. Additionally, while a traditional IRA has required minimum distributions (RMD) rules stipulating that account holders must start taking distributions upon turning age 73, there are no RMDs for Roth IRAs.
Roth IRAs have the same annual contribution limits of traditional IRAs. Roth IRAs also offer similar flexibility to traditional IRAs in that individuals can open online IRA accounts with a provider that best suits their needs.
Self-Directed IRA (SDIRA)
Another 401(k) alternative is a self-directed IRA (SIDRA). SDIRAs are available as traditional IRAs as well as Roth IRAs
However, while IRA accounts typically allow for investment in stocks, bonds, mutual funds, and CDs, SDIRAs allow for a much broader set of holdings, including things like real estate investment trusts (REITs), precious metals, and private equity.
While having the freedom to make alternative investments may be appealing to some individuals, the Security and Exchange Commission cautions that those considering a self-directed IRA should do their due diligence before investing, taking steps to confirm both the investments and the person or firm selling them are registered. They also advise investors to be cautious of unsolicited offers and any promises of guaranteed returns. Finally, an individual should make sure that the investments match their risk tolerance.
Simplified Employee Pension (SEP) IRA
A SEP (Simplified Employee Pension) IRA follows the same rules as traditional IRAs with one key difference: They are geared toward small business owners and the self-employed, allowing them to make contributions on workers’ (or the self-employed individual’s) behalf of 25% of the person’s salary, up to $72,000 in 2026.
Though the proceeds of SEP IRAs are 100% vested with the employee, only the employer contributes to this type of retirement account. To be eligible, the employee must have worked for the company for three out of the last five years.
Because people who are self-employed or own their own companies are eligible to set up SEP IRAs — and can contribute up to a quarter of their salary to it — this type of account can be an attractive option for those individuals who would like to put away more each year than traditional or Roth IRAs allow.
Solo 401(k)
Self-employed individuals and business owners may want to consider a solo 401(k). This type of 401(k) is designed for those who have no employees other than their spouse, and the way it works is similar to a traditional 401(k). Contributions are made using pre-tax dollars and taxed when withdrawn in retirement. (There are also Roth solo 401(k)s using after-tax dollars.) The biggest difference between a regular 401(k) and a solo 401(k) is that there is no matching contribution from an employer with a solo 401(k).
In 2026, total contribution limits for a solo 401(k) are $72,000 if you’re under age 50. You can contribute an additional $8,000 in catch-up contributions if you’re age 50 or older. Those between ages 60 and 63 can contribute an additional $11,250 (instead of $8,000) in catch-up contributions.
Under a new law that went into effect on January 1, 2026 as part of SECURE 2.0, individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their solo 401(k) catch-up contributions into a Roth account. With Roths, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement. (If their plan doesn’t offer a Roth option, individuals who earned more than $150,000 in FICA wages cannot make catch-up contributions.)
One thing to consider: There are extra IRS rules and reporting requirements for a solo 401(k), which may make these plans more complicated than a SEP IRA.
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How a 401(k) Differs From Alternatives
As mentioned, a 401(k) is an employer-sponsored retirement plan. 401(k) contributions are determined by an employee and then drawn directly from their paycheck and automatically deposited into their 401(k) account.
Income tax on 401(k) contributions is deferred until the time the money is withdrawn — usually after retirement — at which point it is taxed as income.
During the time that an employee contributes pre-tax dollars to their 401(k) plan, the contributions are deducted from their taxable income for the year, potentially lowering the amount of income tax they might own. For example, if a person earned a $60,000 annual salary and contributed $6,000 to their 401(k) in a calendar year, they would only pay income tax on $54,000 in earnings.
There are annual limits on 401(k) contributions, and the ceilings on contributions change annually. Here’s a look at the 401(k) contribution limits for 2025 and 2026.
| Tax year | 401(k) contribution limit for people under age 50 | 401(k) catch-up contribution limit for people aged 50 and up | Super catch-up contributions for those ages 60 to 63 |
|---|---|---|---|
| 2025 | $23,500 | $7,500 (for a total of $31,000) | $11,250 (for a total of $34,750) |
| 2026 | $24,500 | $8,000 (for a total of $32,500) | $11,250 (for a total of $35,750) |
If a person participates in multiple 401(k) plans from several employers, they still need to abide by this limit, so it’s a good idea to add up all contributions across plans.
Again, because of the new law regarding catch-up contributions that went into effect on January 1, 2026, individuals aged 50 and older whose FICA income exceeded $150,000 in 2025 are required to put their 401(k) catch-up contributions into a Roth account.
A 401(k) can be a helpful savings tool for a variety of reasons. Because withdrawals are set up in advance, and automatically deducted from an individual’s paycheck, it essentially puts retirement savings on auto-pilot. In addition, employers often contribute to these plans, whether through matching contributions or non-elective contributions.
But there are penalties for early withdrawals from a 401(k). There are also fees, which may include plan administration and service fees, as well as investment fees such as sales and management charges.
The Takeaway
With a number of 401(k) alternatives to choose from, including different types of IRAs and a solo 401(k), there’s more than one way to save for retirement. There are a variety of factors for an investor to consider, including current income, investment interests, and whether it makes sense to invest pre- or after-tax dollars.
Ultimately, the important thing is to identify a retirement savings account for one’s specific needs, and then contribute to it regularly.
Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.
While SoFi does not offer 401(k) plans at this time, we do offer Individual Retirement Accounts (IRAs).
FAQ
What is a better option than a 401(k)?
There isn’t necessarily a better option than a 401(k), but if you’re looking for another type of retirement savings plan, you may want to consider a traditional IRA or Roth IRA. These retirement savings accounts allow you to invest your contributions in different types of investments, and you will generally have a wider array of offerings than you might get with a 401(k). Plus, you can have an IRA in addition to a 401(k), which could help you save even more for retirement.
How can I save for retirement if my employer doesn’t offer 401(k)?
If your employer does not offer a 401(k), you can still save for retirement using several other tax-advantaged accounts such as IRAs and health savings accounts (HSAs), or a taxable brokerage account. Self-employed individuals have other options, including SEP IRAs and Solo 401(k)s.
What 401(k) alternatives are there for the self-employed?
For self-employed individuals, there are several tax-advantaged retirement plan alternatives to a traditional 401(k), including Solo 401(k)s, SEP IRAs, SIMPLE IRAs, and traditional or Roth IRAs. The best choice depends on factors like income, number of employees (if any), and desired contribution limits.
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