Self-Employed · Retirement
Solo 401(k) for Therapists & Counselors — 2026 Calculator
Licensed therapists, psychologists, and counselors in private practice can shelter up to $70,000 per year with a Solo 401(k). Private pay income of $80,000–$150,000 is typical, making the tax savings significant.
2026 max contribution
$70,000
Typical income range
$60,000–$200,000
Catch-up (age 50+)
+$7,500
Deadline to open
Dec 31, 2026
Your 2026 retirement plan
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Solo 401(k) for Therapists & Counselors: What You Need to Know
Business structure
Most therapists in private practice operate as sole proprietors or single-member LLCs. Insurance reimbursements and out-of-pocket client payments are both self-employment income reportable on Schedule C.
Income pattern & timing
Private practice income is relatively stable. Insurance reimbursements are delayed (30–90 days) — plan cash flow carefully so contributions are funded from actual received income, not accounts receivable.
Key strategy
Therapists who take insurance and private pay should calculate Solo 401(k) contributions based on net income after business expenses (office rent, software subscriptions, CEU costs). The employer contribution formula (20% of net SE income) is based on your Schedule C net profit.
Solo 401(k) vs. SEP-IRA for therapists & counselors
A Solo 401(k) allows both an employee deferral (up to $23,500 in 2026) and an employer contribution (up to 25% of net compensation), for a combined maximum of $70,000. A SEP-IRA only allows employer contributions — no employee deferral. This means self-employed therapists & counselors earning under approximately $120,000 in net income can typically contribute more to a Solo 401(k) than a SEP-IRA.
How to open a Solo 401(k) as a therapist
- Get an EIN (free at IRS.gov, takes 5 minutes online). You need this even as a sole proprietor.
- Choose a provider. Fidelity, Schwab, and Vanguard offer free Solo 401(k) plans. Fidelity supports both traditional and Roth contributions with no fees.
- Open the account before December 31 of the tax year you want contributions to count.
- Fund the account by your tax filing deadline — April 15, or October 15 if you file an extension.
Frequently Asked Questions
Can therapists & counselors open a Solo 401(k)?
Yes. Self-employed therapists & counselors with Schedule C or 1099 income qualify for a Solo 401(k) as long as they have no full-time W-2 employees other than a spouse. The 2026 contribution limit is $70,000 ($77,500 with catch-up for those 50+).
Can a therapist employed at a clinic AND in private practice contribute to a Solo 401(k)?
Yes — on the private practice income only. W-2 clinic income doesn't count toward Solo 401(k) contributions, but you can still open a Solo 401(k) for your private practice self-employment income. The $23,500 employee deferral is shared between both plans.
Does telehealth/teletherapy income qualify for a Solo 401(k)?
Yes. If you receive 1099 income from telehealth platforms or see private pay clients remotely, that's self-employment income. Even if your platform handles scheduling and billing, your income classification depends on whether you're a W-2 employee or independent contractor of that platform.
When should a solo practitioner upgrade from a SEP-IRA to a Solo 401(k)?
At any income level below about $90,000 in net self-employment income, a Solo 401(k) allows higher contributions than a SEP-IRA because of the employee deferral component. Our calculator shows you the exact comparison for your income.
Other Solo 401(k) guides
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