Fund a SEP-IRA or solo 401(k) in the peak year
Dec 31 hard stopA 45% income jump at the 35% marginal rate makes retirement deferral the highest-value lever available. A solo 401(k) allows both the $23,500 elective deferral and an employer profit-sharing contribution — more than a SEP at this income — but the plan must be established by Dec 31 to make the elective deferral, even though funding can follow. This is a timing-sensitive setup.
Assumes a solo 401(k) capturing the $23,500 2026 elective deferral plus an employer profit-sharing contribution, deductible against the 35% bracket; a SEP alternative caps near 20% of net SE earnings. Solo-401(k) elective deferral requires the plan be established by Dec 31.
Missing the Dec 31 plan-setup deadline forfeits the larger solo-401(k) deferral for 2026.
$22K–$25K of tax deferred at the 35% rate in the peak year.