Hey everyone, let's talk about how a solo practitioner might set up their retirement and avoid burnout at a theoretical therapy practice we'll call "CUTI LLC." I realize sharing exact numbers makes people highly vulnerable, but this scenario is heavily based on the truth (allegedly!), and I feel it needs to be shared to help others in our field.
For context, let's imagine the owner of CUTI LLC is a 37-year-old single therapist living in Eugene, OR, with very little overhead and no dependents. Because of this specific situation, they can comfortably keep the practice small. I fully acknowledge that having other income streams might be absolutely needed for other cases, like folks with families and higher living costs. That's a topic for another article, though!
Let's say this year, in 2026, this theoretical therapist is only seeing about 7 to 9 clients a week because they also work part-time for the county, run an Airbnb, and have a consulting firm. But for this breakdown, we are going to base the math on what their practice looked like last year in 2025, when they were seeing 10 to 15 clients a week, charging between $185 and $200 per session. Just a quick heads-up: the math I'm going to share is entirely based on estimates, and we are intentionally leaving all of those other passive and side income sources completely out of these calculations to focus purely on what the solo therapy practice allegedly generated.
The Economics of a 10 to 15 Client Week
In our field, burnout is a massive issue. A lot of therapists are seeing 25 to 30 clients a week just to stay afloat, which often leads to reduced quality of care and compassion fatigue. By keeping the caseload small—around 12.5 clients a week on average at $192.50 a session—this hypothetical therapist was able to take 4 weeks off a year and still gross about $115,500.
If we estimate their routine overhead expenses (like an EHR, liability insurance, web hosting, and continuing education) at around $15,500 for the year, the net profit from the practice sits right around $100,000.
The Solo 401(k): The Ultimate Cheat Code
To build real financial freedom with that $100,000, our theoretical practice owner used the Solo 401(k) (also known as the one-participant 401(k))(https://www.irs.gov/retirement-plans/one-participant-401k-plans). Since CUTI LLC is just a solo operation with no W-2 employees, the owner completely qualifies for this incredible tax shelter.
The absolute best part about the Solo 401(k) is that the owner gets to act as both the "employee" and the "employer". Here is how the 2025 IRS contribution limits broke down for this situation [Fidelity 2025 Contribution Limits]:
- As the Employee: In 2025, they were allowed to defer up to $23,500 of their own earnings straight into the account.
- As the Employer: CUTI LLC can make a profit-sharing contribution. Since it is a single-member LLC taxed as a sole proprietor, the IRS says the business can contribute 20% of the "adjusted net earnings". For a $100,000 net profit, after deducting half of the self-employment tax, that employer contribution comes out to about $18,587.
So, working a very manageable schedule seeing clients, this theoretical therapist could funnel $42,087 into their retirement account in a single year! The absolute maximum combined limit for 2025 was $70,000 (or $77,500 if they were 50 or older) , but hitting over $42k on a part-time schedule is incredibly freeing.
What If They Hire People? (A Brief Hypothetical)
Don't worry, in this example, it's just a solo practitioner. But to add a small hypothetical: The Solo 401(k) only works if the business has absolutely no common-law employees. More on this in another article.
Why Skip the SEP IRA?
A lot of CPAs automatically recommend a SEP IRA to solopreneurs, but the Solo 401(k) is vastly superior for this setup. With a SEP IRA, you can only make the employer side of the contribution (that 20% chunk)(https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions). The owner would miss out completely on the $23,500 employee deferral, meaning they'd have to earn way more just to reach the same level of savings.
Advanced Strategies: Mega Backdoor Roth & Loans
There are also two amazing features practice owners can tap into if their income spikes:
- Mega Backdoor Roth: Some Solo 401(k) plans let you make after-tax contributions up to that $70,000 limit and instantly convert them to a Roth account(https://carry.com/solo401k). That means massive, totally tax-free growth for the rest of your life.
- Participant Loans: If the business ever needs cash in a pinch, the owner can literally borrow up to $50,000 (or 50% of the balance) from their own Solo 401(k) without any early withdrawal penalties, and they pay the interest back to themselves.
Where to Actually Open the Account
When it comes to where to park the money, it usually narrows down to a few options based on specific needs:
- Fidelity or Charles Schwab: These are the traditional heavyweights. They charge $0 setup fees and $0 annual maintenance fees(https://carry.com/learn/fidelity-solo-401k-review).
- Carry: This is a modern fintech platform. It costs $299 a year, but it natively automates the Mega Backdoor Roth and lets you invest in alternative assets like real estate syndications or startups(https://carry.com/pricing).
- Rocket Dollar or IRA Financial: If the goal is to buy a physical rental property with retirement funds, a "Checkbook Control" structure is needed. These providers set up an LLC owned by the 401(k) so the owner can write checks directly from a bank account to buy real estate(https://www.rocketdollar.com/blog/understanding-the-differences-direct-custody-self-directed-ira-checkbook-control-ira-and-solo-401k).
Overall, building a practice this way means a therapist gets to show up fully present for their clients—whether it's the 10 to 15 they saw last year or the 7 to 9 they are seeing now—without burning out, while the Solo 401(k) quietly builds their financial independence in the background.
