Retirement Accounts for Self‑Employed Clinicians

Self-employed therapists have several retirement account options, including SEP-IRAs, Solo 401(k)s, and Roth IRAs. Each plan offers different contribution limits, tax advantages, and administrative requirements, making it possible to tailor savings strategies to your practice size and income level.

For many therapists, the decision to go into private practice is about autonomy, flexibility, and building a career that reflects personal values. Unlike W-2 employees who may have access to employer-sponsored plans, self-employed therapists must create their own retirement savings structure, The good news is that there are several account types designed specifically for small business owners and solo practitioners.

SEP-IRA

A Simplified Employee Pension (SEP-IRA) is one of the most popular options for self-employed professionals. It allows contributions of up to 25% of net earnings. Contributions are tax-deductible, reducing taxable income in the year they’re made. SEP-IRAs are relatively easy to set up and administer, making them attractive for therapists who don’t want to spend hours managing paperwork. If you expand your practice and hire employees, you’ll need to contribute the same percentage for them as you do for yourself.

Solo 401(k)

For those who want higher contribution limits and more flexibility, the Solo 401(k) is a powerful tool. It allows you to contribute both as the “employee” and the “employer.” In 2024, you can defer up to $23,000 as an employee (plus a $7,500 catch-up if you’re over 50), and then add up to 25% of net earnings as the employer, with a combined cap of $69,000. Solo 401(k)s also allow Roth contributions, meaning you can choose between tax-deferred or tax-free growth. The trade-off is that they require more administrative upkeep, including annual IRS filings once the account balance exceeds $250,000

Traditional and Roth IRAs

Even if you choose a SEP or Solo 401(k), you can also contribute to an Individual Retirement Account (IRA). Traditional IRAs allow tax-deductible contributions, while Roth IRAs offer tax-free withdrawals in retirement. For 2024, the contribution limit is $7,000 ($8,000 if you’re over 50). Roth IRAs have income limits, so higher-earning therapists may need to use a “backdoor” Roth strategy. These accounts are especially useful for diversifying tax treatment of retirement savings.

Choosing the Right Plan

The best plan depends on your practice’s structure and income:

• Solo practitioners with high earnings often benefit most from a Solo 401(k).

• Therapists with modest income or who want simplicity may prefer a SEP-IRA.

• Those seeking tax-free withdrawals later should consider Roth IRAs.

It’s also wise to think about your long-term goals. If you plan to expand your practice and hire staff, a SEP-IRA may be easier to extend to employees. If you expect to remain solo, a Solo 401(k) offers unmatched flexibility.

Final Thoughts

Retirement planning can feel overwhelming, especially when balancing client care with business management. But taking the time to set up the right account now is a form of self-care that ensures financial stability later. Self-employed therapists who consistently contribute to SEP-IRAs, Solo 401(k)s, or Roth IRAs build not only financial security but also peace of mind — knowing that their future is funded while they continue to support others in the present.