The Secret to Maximizing Retirement Savings for Professional Athletes: Why the SEP IRA May NOT Be Your Best Option

As a professional golfer you are focused on building your career, perfecting your game, and building your legacy. But smart financial moves off the field are just as important—especially when it comes to turning today’s earnings into lasting wealth.

As a professional golfer you qualify for powerful retirement tools that are not available to traditional W-2 employees: the Solo 401(k) and the SEP IRA.

They are both tax-advantaged accounts for self-employed individuals. But when you compare them side-by-side, the Solo 401(k) isn’t just better – it’s a game-changer.

Let’s break it all down.

What Is a Solo 401(k)?

A Solo 401(k) is a retirement plan for self-employed individuals with no full-time employees. As a professional golfer, your coaches, trainers, caddy, etc. that make up your team are considered contractors, not employees, so you qualify. With a Solo 401(k), you can contribute as both:

• The employee (up to $23,500 in 2025)
• The employer (up to 25% of net income) With a total cap of $70,000 per year.

With a SEP IRA you can contribute approximately 20% of your net income to the plan, with the same total cap of $70,000 per year. This means you need about $350,000 in net income to maximize the $70,000 contribution.

The key advantage of the Solo 401(k) is the flexibility in contribution types, employee vs. employer, and Traditional vs. Roth.

• Employee vs. Employer: Since the Solo 401(k) allows employee contributions, this enables you to get more money into the plan if your net income is below $350,000.
• The Solo 401(k) allows you to contribute the first $23,500 in income to the plan, as well as 25% of the remaining income (up to a $70,000 total contribution) to speed up your contributions. With a Solo 401k you only need about $210,000 in net income to maximize the contribution.
• The SEP IRA contribution is based on a formula that equates to approximately 20% of net income. It would take $117,500 in income just to get to the initial $23,500 contribution that the Solo 401(k) made above.
• Traditional vs. Roth: The Solo 401(k) allows you to make Roth (after-tax) contributions to the account. This allows for long term tax-free growth. This can potentially save you and your family a significant amount in taxes over time, as distributions are tax-free after age 59-1/2.
• The flexibility of these two advantages combined are extremely powerful to use, especially in down years when maybe you are injured or miss time, or when you don’t have as much taxable income for the year.

The Bonus Advantage: Use a Backdoor Roth IRA

If your income is too high to qualify for a regular Roth IRA (in 2025, the limit is $150,000 for single filers, $236,000 for joint filers), the IRS doesn’t allow you to contribute directly. But there’s a legal workaround called the Backdoor Roth IRA.

Here’s how the Backdoor Roth IRA works logistically:

1. Confirm you do not have any pre-tax IRA accounts (like a SEP IRA)
2. Contribute to a Traditional IRA (non-deductible)
3. Convert it to a Roth IRA
4. Now you have Roth money growing 100% tax-free
5. If you are married, your spouse can make the same contributions.

✅ This strategy works smoothly only if you have no pre-tax IRA balances (like a SEP IRA). A Solo 401(k) is perfect for this.

❌ If you have a SEP IRA, the IRS pro-rata rule kicks in, which would create a tax bill on your conversion.

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The Solo 401(k) / Backdoor Roth IRA combo is incredibly powerful:

• Solo 401(k): Tax-deferred or Roth, large contributions
• Backdoor Roth IRA: Extra $7,000/year growing tax-free

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The “Mega Backdoor Roth” Solo 401k

One last option to potentially take advantage of. For the high earners that are likely going to be in the top tax brackets for the rest of their life, there is an advanced strategy commonly referred to as the “Mega Backdoor Roth” Solo 401(k). This is where you essentially combine both strategies into one, and all $70,000 of your Solo 401(k) contributions end up being after-tax contributions and grow tax-free. In this strategy you are giving up the current year tax savings of a pre-tax Solo 401(k), but the tax savings in the long run can be another game changer.

Why This Matters for Professional Golfers

The common retirement strategies discussed in the media are for just that, the common savers. You are anything but common. You are an elite athlete. You have elite earning potential, but your earning window is shorter than the general public. The decisions you make now will shape the rest of your financial life. The Solo 401(k) gives you:

• More contribution power during lower income levels
• Tax-free or tax-deferred growth flexibility
• Access to Roth IRA strategies even when your income is too high

Final Take: The Solo 401(k) Is the MVP

When it comes to financial strategy for professional golfers the Solo 401(k) is the preferred option over the SEP IRA. And when paired with a Backdoor Roth IRA, you’re maximizing both contribution limits and tax-free growth.

That’s not just smart—that’s a total game changer.

Don’t just win on the course. Win for life.

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