When you're a one-person show with a small business, figuring out the best way to save for retirement can feel like trying to choose between a classic Disney movie and the latest blockbuster. Both options have their perks, and it's all about finding the one that fits your style. Let's dive into the pros and cons of a Solo 401k and a SEP IRA to help you make the best choice for your anticipated $75,000 in net self-employment income this year.

Starting with the Solo 401k, this option is like having the superhero cape of retirement accounts. It allows you to contribute both as an employee and as an employer, which can really turbocharge your savings. For 2023, you can stash away up to $22,500 as an employee—and if you’re over 50, there’s a catch-up contribution of an extra $7,500. Then, as the employer, you can add another 25% of your net earnings, which means you could potentially contribute around $61,000 in total! That's almost like finding a hidden level in your favorite video game.

But here’s the plot twist: Solo 401ks come with a few responsibilities. You’ll need to file Form 5500 if your account balance exceeds $250,000, which can feel like homework for a class you didn’t sign up for. Plus, they can have higher administrative costs, especially if you’re opting for a more complex plan.

Now, let’s talk about the SEP IRA, which is the dependable sidekick of retirement accounts. It's super straightforward—just contribute up to 25% of your net earnings, with a maximum of $66,000 for 2023. So, if you’re looking to keep things simple and avoid a lot of paperwork, this could be your go-to. There’s no annual filing requirement, which is like skipping a level in a game you find too challenging.

However, the SEP IRA doesn’t let you make those extra employee contributions like the Solo 401k does. So if you’re hoping to max out your savings, you might find yourself feeling a little short-changed. Plus, all your contributions are made pre-tax, which means you won’t have the option of tax-free Roth contributions that you can get with a Solo 401k.

In terms of tax advantages, both accounts shine, but they do so in different ways. The Solo 401k offers the potential for a higher total contribution limit, which is like having access to the VIP lounge of retirement savings. The SEP IRA, on the other hand, shines with its simplicity and lack of administrative hassle, making it perfect for someone who wants to focus more on running their business and less on managing complex paperwork.

Ultimately, the choice between a Solo 401k and a SEP IRA comes down to how much you want to contribute and your comfort level with managing the account. If you’re looking to go all-in with your retirement savings and don’t mind a bit of extra paperwork, the Solo 401k could be your best bet. But if you prefer a no-fuss approach that still offers solid tax advantages, the SEP IRA might just be the trusty sidekick you need. Whichever path you choose, just remember that saving for retirement is one of the best investments you can make in your future—like finding the perfect pair of shoes that go with everything.