Solo 401k vs SEP IRA: Which Retirement Deadline Applies to Your Side Income?

If you picked up side income this year, you have until December 31 to open a Solo 401k and get roughly a 30% return, just from the tax savings. A SEP IRA buys you more time since it can be funded up until the tax filing deadline. Miss that window and this year's break is gone.

I'm Ralph Estep Jr., a licensed public accountant with 30 years in the business. I walk through questions like this every weekday on Becoming Financially Confident.

Quick take

• Solo 401k: open and fund by Dec 31. SEP IRA: fund anytime before your tax filing deadline.
• Pre-tax contributions can return about 30% right away, once federal and state taxes are counted.
• Maryland now bans unsolicited home equity loan checks starting October 1. Fines run up to $500.
• Ask about a 401k "true-up" before year-end, or you could leave free money on the table.
• The FTC found 1 in 4 credit reports have an error. WalletHub shows what's dragging yours down, for free.

Retirement deadlines for side income

A Solo 401k has to be opened and funded by December 31 to count this year. A SEP IRA can wait until your filing deadline. This year's Solo 401k limit is about $24,000. A SEP IRA allows up to 25% of self-employment income. A traditional IRA works for smaller amounts, capped around $7,000 to $7,500.

Ralph's math: 22% federal tax plus 8% state tax adds up to a 30% return the moment the money goes in, before any market gains. If you're already maxing out a 401k at your regular job, watch the combined limit. The two can't stack past that ceiling.

Maryland's new loan check ban

Starting October 1, it's illegal for lenders to mail unsolicited checks that turn into a home equity loan the moment you sign the back. It looks like junk mail, but signing and depositing it puts your home up as collateral. Mailers who send these in Maryland now face a misdemeanor and a fine up to $500.

Shred any unsolicited loan check instead of tossing it, since it carries your personal information. Call 1-888-5-OPT-OUT to get off these lists for good.

Are you getting your full 401k match?

Look for a true-up, a correction that keeps your employer's match accurate after a raise or bonus shifts your pay mid-year. Bigger companies on payroll systems like ADP or Paychex usually catch this automatically. A smaller employer running payroll by hand might not.

Ask HR two questions: does the plan include true-up matching, and is your contribution rate on pace to capture the full match by December 31?

A free way to check your credit

The FTC found 1 in 4 people have an error on their credit report, and 5% end up paying more on loans because of it. WalletHub updates your score daily for free and shows exactly what's pulling it down.

Where is your money actually going?

Start with real take-home pay, not your salary number. Sort expenses into fixed costs like rent, variable costs like groceries, and the easy-to-forget ones: registration, annual insurance add-ons, yearly subscriptions, gifts, dues, pet or home upkeep.

Every dollar gets assigned to one of five jobs: survival, stability, future, joy, generosity. The 50-30-20 rule is a starting point, not a fixed target. Two people with different costs of living will land in very different places.

This week's Money Move

List every subscription you're paying and cancel one that isn't earning its keep. Test a new tool on a monthly plan before committing to annual, especially with AI tools changing fast enough to make a yearly deal go stale.

Got a money question? Send it in at becomingfinanciallyconfident.com/voicemail, or catch the show live weekdays at 11:30 AM Eastern at becomingfinanciallyconfident.com/live.