Direct answer
Neither a solo 401(k) nor a SEP-IRA is automatically best for a 1099 physician. The choice depends on eligible employees, net earnings or entity wages, other employer plans, contribution goals, cash flow, administration, deadlines, and the physician’s broader retirement strategy.
Confirm who must be covered
A one-participant 401(k) is designed for an owner-only business and a spouse in permitted circumstances. Employees or related businesses can change eligibility and testing; ownership facts should be reviewed before opening a plan.
Understand how contributions are calculated
Contribution categories and compensation definitions differ by plan and entity type. For an S corporation, owner contributions are generally tied to W-2 compensation rather than shareholder distributions.
| Review point | Solo 401(k) | SEP-IRA |
|---|---|---|
| Employee eligibility | Generally owner-only business; spouse may participate when eligible | Eligible employees may need comparable employer contributions |
| Contribution structure | May combine employee deferral and employer contribution | Employer contribution structure |
| Administration | Plan operation and possible information-return duties | Often simpler to establish and operate |
| Best fit | Depends on facts and desired plan features | Depends on facts, employees, and contribution goals |
Coordinate every employer plan
A physician participating in a hospital plan and a separate business plan may face limits or aggregation questions. Collect plan documents and confirm employer relationships before assuming both plans can be maximized independently.
Compare administration with flexibility
A solo 401(k) can offer design flexibility but also plan documents, operational duties, and possible filing requirements. A SEP-IRA is often simpler, while contribution mechanics and downstream planning consequences differ.
Primary sources
Frequently asked questions
Can a physician have a hospital 401(k) and a solo 401(k)?
Possibly, but contribution limits, related-employer rules, and plan terms must be coordinated.
Does an LLC determine the retirement contribution?
Not by itself. Federal tax classification, earned income or wages, employees, and the plan document affect the calculation.
Should a physician open the plan at year-end?
Plan establishment and contribution deadlines vary by plan and contribution type. Review the current rules before acting.