Naturally, the financial industry has provided a host of confusing products, the research of which will probably result in your procrastination. So, I'm going to boil it down for you, and compare two standard products: the SEP IRA vs Solo 401k.
Just to be clear, this post is mostly meant to compare each of these retirement plans for the purpose of someone who is self-employed and does not have employees, except for a spouse. Mainly because a Solo 401k (as the word “solo” indicates) is for an individual person. A traditional 401k would accommodate someone with employees.
A SEP IRA stands for “Simplified Employment Plan” IRA. It's a retirement plan that is intended for businesses, and allows participation by owners and employees. A Solo 401k (also can be referred to as an individual 401k or self-employed 401k) is available to business owners and their spouses (if involved in the business).