To me, the most important difference is the contribution limits. The max for a SEP-IRA is up to 25% of compensation with a cap of $44,000. On the other hand a Solo 401(k) allows profit sharing contributions of up to 25% of compensation plus tax-deductible salary deferrals to the plan of up to $25,000. The cap is the same at $44,000.

So while the caps are the same, you can make very little self-employed income and basically defer it all, which you can’t do with the SEP-IRA. This gives you that added flexibility which is especially useful for those who have some self-employed income as secondary income and want to get the most tax advantages. For example, if you made $25,000 of eligible compensation, you could sock all $25,000 of it away with a Self-Employed 401(k), but only $7,500 with a SEP-IRA.

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I found a great resource for all things personal tax and finance related. It also provides you with important stock trading tips as well as pieces of advice from experts in the field of money management. In this case I believe if both are exclusive entities you should be ok. As far as calculating the contribution limits, don't waste your time with a finance representative, there are enough places on the internet to find help. Good luck!

Here is a great calculator on the site to help you determine maximum contribution limits to 401k, SEP and SIMPLE IRAs.

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