SEP versus an Independent 401(k):

Building a Retirement Plan for the Self-Employed Nurse Anesthetists

As a CRNA, you’ve invested in yourself to build a thriving and valuable career. For those who work as a contractor, you’ve taken on the challenge (and joy) of building a business that gives you added freedom and flexibility.

As much as you might relish this independence, contract CRNAs have a higher level of personal responsibility when it comes to career management and retirement planning. For self-employed workers, retirement savings plans require special attention.

In the US, there are many retirement options, and they all have significant amounts of fine print. It takes time and know-how to identify which plan will work best for you properly, and that’s an especially difficult challenge for a busy CRNA.

You are a professional nurse, but financial planning is a whole other job. How can you be expected to do both effectively?

The truth is, you don’t have to. A financial advisor who understands the ins and outs of your profession can give you specific and informed advice on your retirement savings option. When you work with an advisor, you will get the strategy to create savings and protect your assets, so you can enjoy a retirement that you’ve worked so hard to earn.

A crucial part of that strategy is knowing what retirement saving options exist for independent contractors. Understanding their general function will help you weigh their advantages and disadvantages, allowing them to make an informed choice.

In general, self-employed individuals with few or no employees have two main retirement savings options: The SEP-IRA and the Independent 401(k). Each option comes with certain benefits and some drawbacks. It’s vital that you understand the value of each saving option within the context of your professional circumstances as a CRNA.


The Simplified Employee Pension (SEP) IRA is a retirement account that functions much like a traditional IRA. Contributions are tax-deductible, and investments grow tax-deferred until liquidated at retirement.

As a CRNA, you are likely the sole-proprietor of your business. Within this context, there are limits to your SEP contribution at less than 20% of net Schedule C (net earnings less ½ FICA), which translates to $56,000. This contribution is tax-deductible and grows tax-free, but will be taxed on distributions when you retire.

A SEP does not allow you to increase your contribution after the age of 50. As a CRNA whose wage is likely to be at its highest during this period, this stipulation could be quite limiting when it comes to maximizing the growth of your retirement savings. That said, you need to weigh the pros and cons of this option alongside your career trajectory and retirement goals.


The second option for CRNA contractors is an Independent 401(k) (called a “Solo 401(k). For higher-earners, like Nurse Anesthetists, these plans offer different contribution options:

  • Roth salary deferrals and After-tax contributions:
    These two options do not reduce taxable income, but because you pay your taxes upfront these assets will be distributed tax-free upon retirement, which means that the money in your retirement savings is money that you keep and use during your retirement years,
  • Pre-tax contributions and Employee Pre-Tax deferrals:
    Functioning much like a tradition SEP, these contributions reduce taxable income but require you to pay taxes on any retirement savings upon their distribution. In other words, you aren’t going to pay taxes now. Instead, you’ll have to pay taxes on your savings during retirement.

The benefit of an after-tax contribution option is one of the many advantages of the 401(k) option. For high-earning nurse anesthetists, you can see the real value of this strategy once you hit age 50. Unlike the SEP, the 401(k) allows you to increase your salary deferral and catch up on contributions.

Again, given the career trajectory of CRNAs, whose wages are often at their peak in the last ten years of work, this plan provides excellent options and reliable tactics for building and protecting your retirement assets.

Here’s a breakdown of the contribution options of a 50-year-old person with an annual income of $100,000.

2019 W2$100,000$100,000
Salary Deferrals$19,000Not Available
Catch-up contribution$6,000Not Available
Employer pre-tax$25,000$25,000
Employer after-tax$12,000Not Available

As you can see, for high-earning contractors, the 401(k) provides some very enticing advantages. A financial advisor who understands your profession will be able to map out how an SEP or independent 401(k) just like the chart above. Working with an experienced financial advisor will help you understand your savings option so you can achieve your retirement dreams.

As a CRNA contractor, you’ve created a career on your terms. You should be able to retire on your terms, as well.

Don’t let confusion get in the way of a great retirement plan.

To find out more book a consultation with a CRNA Financial and Retirement Advisor today.

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