The Three Investment Accounts That Freelancers Should Have
The ‘don’t blame me’ blurb: I am not a financial advisor, portfolio manager, or accountant. This is not tax or investment advice; it’s information to get you going. Please consult your trusty professional and do your due diligence. Carry-on!
Freelancers realizing they can sock away $80,000 plus every year.
Updated: February, 2026
TL;DR
These are the three accounts to setup as a freelancer, self-employed or solopreneur to create future wealth while you sleep.
The Solo 401(k), Backdoor Roth IRA and the HSA.
Why? All three provide huge tax advantages.
They are the wrappers, inside each one is the investment candy — I suggest a Three-Fund Portfolio, or a Target Date Fund. You can also use other stocks or mutual funds.
Don’t wait, open them now and start making even small contributions. Then get back to dealing with the latest client blowing-up your inbox.
The Solo 401(k), Backdoor Roth IRA, and HSA — the three accounts every freelancer needs.
Nobody at your freelance gig is setting up a retirement plan for you. There's no HR department sliding a benefits packet across the table. You're on your own — and that's actually good news. Because the retirement accounts available to self-employed people are better than what most 9-to-5 workers get. You just need to know which ones to open.
The accounts can be stacked together to shelter a massive chunk of your income from the taxman every year.
How massive? The combined yearly maximum for 2026 depends on your age:
Up to age 49: $83,900
Age 50–59 or 64+: $93,000
Age 60–63: $97,250
And if your spouse works in the business? They may have similar limits. We're talking potentially north of $180,000 a year, tax-advantaged. Not bad for a couple of creatives running a business out of their spare bedroom.
Here are the three accounts and what you need to know about each one.
Quick Primer: The Candy and the Wrapper
Think of these accounts as wrappers protecting the candy from the taxman. The wrapper is the account type — Solo 401(k), Backdoor Roth IRA, or HSA. The candy inside is what you invest in — stocks, mutual funds, ETFs, Target Date Funds, or our favourite Three-Fund Portfolio. The wrapper determines how and when that money gets taxed. You can hold the same investments inside any of these accounts.
Schwab, E*Trade, and Fidelity are all solid companies to open these accounts with. My accounts are with Schwab, my HSA is with Fidelity as Schwab does not have one.
Account #1: The Solo 401(k) — Your Biggest Weapon
This is the one. If you're a freelancer, single-person business, or Solopreneur the Solo 401(k) has the highest contribution limits, the best flexibility, and it's the most powerful retirement tool we've got. It eats the staffer’s 401(k) for breakfast.
It’s like a staffers 401(k), however the difference us with the Solo 401(k) is you are the employer AND the employee. If you only set up one account, make it this one.
Who qualifies? You need self-employment 1099 income and no W-2 employees (your spouse is the exception — they can participate). It works for sole proprietors, single-member LLCs, S-Corps. If you receive other W-2 income from an employer you cannot use or include that income in a Solo 401(k).
2026 contribution limits — you contribute as both employee and employer:
Employee Contribution (that’s you):
$24,500 up to age 49
$32,500 age 50+
$35,750 if you're in the sweet spot of 60–63.
PLUS the Solo 401(k) lets your business (yep, you again as the employer) kick in up to an additional 25% of the W-2 salary that you paid yourself.
For sole proprietors without a payroll, it works out to roughly 20% due to the IRS formula — look at the Solo 401(k) guide or your accountant can run the exact number.
Example: Sara is 36, she contributes $24,500 in to the Solo 401(k). She paid herself a $100,000 W-2 salary via payroll. Her own company can now contribute up to an additional $25,000 in to the Solo 401(k). That's $49,500 sheltered from taxes. Your accountant just did a little fist pump.
Solo 401(k) Total Limits for 2026:
$72,000 if you're under 50.
$80,000 if you're 50+.
$83,250 if you're 60–63.
Traditional vs. Roth — you get both options. With the traditional Solo 401(k), the money goes in pre-tax — huge deduction now, taxed later in retirement when you're presumably in a lower bracket. With the Roth Solo 401(k), you pay tax now, but everything — contributions and decades of growth — comes out tax-free in retirement. You can split contributions between both, but the combined limits stay the same. One rule: if you have both traditional and Roth, they must be with the same provider.
Important timing notes:
Your Solo 401(k) plan must be established by December 31st to make employee deferrals for that tax year.
For S-Corps employee contributions must be in by December 31st. For Sole Traders it’s by your tax filing deadline (but check with your accountant.)
Employer contributions for S-Corp or Sole Trader can be deposited up to your tax filing deadline, including extensions.
Read the full Solo 401(k) guide here. Feel free to name your first child after me.
Account #2: The Backdoor Roth IRA — Tax-Free Growth for Life
The Backdoor Roth IRA is where your money grows completely tax-free. You don't get a deduction going in, but you pay zero tax when you take it out in retirement. Zero — on the contributions and all the growth. If your investments grow tenfold over 30 years, Uncle Sam doesn't see a dime of it.
You can also withdraw the original contributions at any time without penalty. Try not to, as Future You will be poorer.
Yes, you can have Solo 401(k) AND a Backdoor Roth IRA, they have separate contribution limits. Boo-Yah!
2026 limits:
$7,500 up to age 49, or
$8,600 for age 50+
It's not going to move mountains on its own, but stacked on top of a Solo 401(k), it's another layer of tax protection you shouldn't leave on the table.
Why "backdoor"? Hey, mind out of the gutter. The Roth IRA has income limits. Earn too much, and you can't contribute directly. The backdoor method is a perfectly legal workaround: contribute to a traditional IRA (no income limits on that), wait a few days for the funds to settle, then convert it to your Roth IRA. Your brokerage will have a form for this — it takes about ten minutes. They'll issue the appropriate tax forms at year-end.
Warning — this one matters: If you already have money sitting in a traditional IRA, or a SEP-IRA the backdoor gets complicated fast. There's a gotcha called the ‘Pro-Rata Rule’ that will trigger an unexpected tax bill. If this applies to you, talk to your accountant before doing anything. Don't wing this one.
Account #3: The Health Savings Account (HSA) — The Stealth Retirement Account
The HSA is technically designed to make out of pocket medical expenses a tax deduction. But it's quietly one of the most tax-efficient retirement accounts in the entire tax code. It's the only account that gives you a triple tax advantage: deduction going in, tax-free growth, and tax-free withdrawals for qualified medical expenses. No other account does all three.
You need a High Deductible Health Plan (HDHP) to qualify. In 2026, that means a minimum deductible of $1,700 for individuals or $3,400 for families. Many freelancers end up on high-deductible plans anyway because the premiums are lower — so you probably already qualify. New for 2026: Bronze and Catastrophic plans from healthcare.gov are now HSA-eligible too, which opens this up to even more freelancers.
2026 contribution limits: $4,400 for singles, $8,750 for families. If you're 55 or older, add another $1,000. Fund it from your personal checking account, not your business account. Note: Always keep business and personal income separate — your accountant will thank you, and the IRS won't have reason to come knocking.
The stealth move: You don't have to spend the HSA money on medical bills right now. You can invest it — same as you would in a Solo 401(k) or Roth IRA — and let it grow for decades. Pay your current medical expenses out of pocket, save the receipts, and let the HSA compound. After age 65, you can withdraw for any reason (you'll pay income tax on non-medical withdrawals, similar to a traditional 401(k), but no penalty).
Note: If you’re freelance but your income is W-2 only, then the Backdoor Roth IRA, the HSA and the taxable brokerage account are for you. You can’t fund a Solo 401(k) with taxed W-2 income from an external employer.
What investments do you put inside the accounts?
This is the part where Wall Street wants you to think it's complicated. It's not.
Invest in:
A Three-Fund Portfolio of ETFs
A Target Date Fund
The HSA: If you are going to use it to pay for medical expenses, use VBIL
You do not need to buy individual companies or follow the stock market. That’s right, zero time wasted. Wall Street and some in the financial industry want you to think investing is hard so they can convince you to pay them fees to advise you. They don’t make money from simplicity. It’s not hard, ignore them.
A shocking 88% of professional Wall Street fund managers do WORSE than the S&P 500 Index over a 15 year time horizon. Why would you pay them for that? Have a look at the S&P Global graphic (you know, the guys that invented the S&P 500 Index) on how badly they suck.
Read this article on the Three-Fund Portfolio of ETFs and Target Date Funds here, and the article on the stock market. The market will crash at some point, it’s designed to, and that’s ok. Keep investing every month/quarter duriung and after a crash.
No thanks, Mr Wall Street. We don’t need to pay your fees.
If you are five years away from retirement
I suggest getting a plan from a CFP - Certified Financial Planner. They’re not just a ‘Financial Advisor’, which can mean many things in the U.S. They are educated and tested on financial planning and are a fiduciary. The must act in your best interest. This is not always the case with financial advisors. Shocking, I know.
Boldin and Vanguard both have options for CFPs. I do not get any kind of referral from these links. It’s a place to start.
Next Steps — Don’t wait. Future you needs you now.
If you're a freelancer with 1099 income and no W-2 employees besides your spouse, here's the order of operations:
1. Open a Solo 401(k). This is your priority — the biggest deduction, the biggest bucket. If you can only do one thing, do this.
2. Fund a Backdoor Roth IRA. Got cash left after your Solo 401(k)? Funnel $7,500 (or $8,600 if 50+) into a Roth IRA using the backdoor method. Tax-free growth for life.
3. Max out your HSA. If you're on a qualifying high-deductible health plan, contribute the max and invest it. Use it for medical expenses, even better, let it ride and grow.
That's the Triple Stack. It's not glamorous, nobody's making a movie about it, and it won't win you points at dinner parties. But twenty years from now, when your accounts have compounded into something serious, you'll be glad you spent the hour to set them up.
Bonus Round for the over achievers
Emergency Fund: I know you already have an Emergency Fund because you’re trailblazing out on your own and it would be insane if you didn’t (yes, that’s a neon-lit hint, bubbie). Here is an emergency fund refresher on where to stash the cash, including a Federal tax-free option. Sorry IRS, more for us, less for you.
Taxable Brokerage Account: Yes, it’s just a plain stock/ETF/mutual fund brokerage account.
It's not sexy, it's not a deduction, but once your three accounts are maxed out, this is where the overflow goes. Think of it as the fourth chair at a three-person table — you'll be glad it's there.
It’s not a tax-advantaged account like the three above, but you only pay capital gains tax if you hold the investment for one year when you sell. You’re most likely looking at only a 15% tax rate, not your effective income tax rate which is probably around 25-30%.
Chat with your accountant or financial advisor about which combination works for your situation. We're going to get rich slow. In later years, live more, work less.
What are your tax-saving strategies? Did your accountant tell you any of this? Drop a comment below!
A Note on the SEP-IRA
The SEP-IRA was once the go-to retirement account for solo entrepreneurs, and some accountants still recommend it out of habit. Now it’s like turning up to a party in a tie-dyed t-shirt.
The SEP only allows employer contributions — up to 25% of compensation. You don’t get the Solo 401(k) automatic employee contribution. The SEP has a $72,000 maximum for 2026.
Also, contributing to a SEP-IRA will almost certainly trigger the Pro-Rata Rule, making the Backdoor Roth IRA a tax headache. If you have a SEP, consider opening a Solo 401(k) and then roll the SEP money in to it. Your future self will thank you for the paperwork. Your future accountant will thank you even more.
Where the SEP still makes sense: If you have even one W-2 employee who isn't your spouse, you can't use a Solo 401(k). The SEP maybe your move. Just know that you have to pay them the same percentage that you pay yourself.
Want to see how your future wealth will grow?
Play around with the compound interest calculator below. A Three-Fund Portfolio or Target Date Fund will grow around 7% or 8% per year.
Compound Interest Calculator
Watch your money grow. Play with the numbers and see the magic of compound interest. We will get rich, slow.
Your Results
| Year | Contributed | Interest | Balance |
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💡 Use 7-8% as a conservative estimate for a Three-Fund Portfolio. 10% is the long-term S&P 500 average before inflation. The real magic happens after year 15 when compound interest really kicks in. Start now — future you will be grateful.
