Retirement Plans for Therapists: 4 Smart Options

Retirement plans for therapists come down to four common choices: a traditional or Roth IRA, a SEP IRA, a SIMPLE IRA, and a solo 401(k). If you run a private practice, you have no employer match and no automatic payroll deduction. You pick the plan, and you fund it yourself. This guide compares the options so you can bring better questions to your accountant.

This is general information, not tax or investment advice. Talk to a CPA or financial advisor before you choose a plan.

What are the retirement plans for therapists in private practice?

Solo and group practice owners usually pick from these four. Psychiatrists and psychotherapists face the same choices, because the rules depend on how you are taxed, not on your license.

Plan	Who contributes	Set-up timing	Good fit when
Traditional or Roth IRA	You	Open any time	You want a simple account, alone or on top of another plan
SEP IRA	Employer side only	Up to your tax return due date, including extensions	You are self-employed and want low paperwork
SIMPLE IRA	You and a required employer contribution	January 1 to October 1, with a special rule for a later start	You have a few staff, or want a defer-plus-match structure
Solo 401(k)	You as employee and as employer	See the IRS plan page	You have no employees other than a spouse and want higher combined contributions

Source for plan features and timing: IRS, retirement plans for self-employed people (checked 10/20/26).

IRA basics for self-employed therapists

An individual retirement arrangement (IRA) is the simplest place to start. For 2026, the IRS lists a combined limit of $7,500 across all your traditional and Roth IRAs, or your taxable compensation if that is lower. If you are 50 or older, the limit is $8,600. Roth contributions may be limited by your filing status and income. See the IRS IRA contribution limits page (checked 10/20/26) for the current rules.

SEP IRA

A Simplified Employee Pension (SEP) IRA takes contributions from the employer side only. For a self-employed person, the IRS says the contribution can reach up to 25% of net self-employment earnings, up to a yearly dollar cap. You can set one up as late as your tax return due date, including extensions. It works well when your income swings from year to year, because you decide the amount after you know your numbers.

SIMPLE IRA

A SIMPLE IRA lets you defer part of your net self-employment earnings, with a catch-up if you are 50 or older. You must also make either a 2% fixed contribution or a 3% match. You set it up between January 1 and October 1, so it needs earlier planning than a SEP.

Solo 401(k)

A solo 401(k) is for a business with no employees other than a spouse. You contribute as the employee and as the employer, up to a combined cap. The IRS notes it can allow loans and hardship distributions if the plan permits, and it is exempt from discrimination testing. If you plan to hire, ask your CPA what changes.

Annual limits change

Dollar limits adjust each year. The IRS page for self-employed plans shows older figures, so check the IRS cost-of-living adjustments page for the current limit before you fund any plan.

Steady collections make retirement saving easier

You can only fund a plan with cash you actually collect. Late payments and denied claims make saving harder. Three habits help:

• Send clean claims the first time.
• Run a monthly billing review so denials do not sit.
• Know whether you want a biller or a superbill process. See superbill vs. billing service.

For more on running the business side of a practice, visit our private practice management hub.

How MCM South helps

MCM South is a medical billing company for psychotherapists and psychiatrists. We handle claims, denial follow-up and appeals so you can spend less time on billing. Get a free quote or see our billing services.

Retirement plans for therapists FAQ

Which retirement plan is easiest for a solo therapist?

A SEP IRA has the least paperwork, and you can open it up to your tax return due date. A traditional or Roth IRA is also simple. Your CPA can tell you which fits your income.

Can I have an IRA and a solo 401(k)?

Many people hold an IRA alongside an employer plan, but deduction and Roth limits can change. Ask your CPA.

When must a SIMPLE IRA be set up?

Between January 1 and October 1, with a special rule if you became self-employed later in the year, according to the IRS.

Do psychiatrists and psychotherapists use different plans?

No. The choice depends on your tax structure, income and staff, not your license type.