SEP IRA Contribution Calculator
Calculate the maximum contribution you can make to your Simplified Employee Pension (SEP) IRA based on your self-employment income.
Understanding SEP IRAs
A Simplified Employee Pension (SEP) IRA is a retirement plan designed for self-employed individuals and small business owners. It allows you to contribute a significantly higher amount than a traditional or Roth IRA, making it an excellent tax-shelter vehicle.
Contribution Limits
For 2024, the IRS limits SEP IRA contributions to 25% of compensation (or 20% of adjusted net earnings if you are self-employed), up to a maximum of $69,000. Unlike a 401(k), SEP IRA contributions are strictly employer contributions.
Worked Example
- Net Self-Employment Income (Schedule C): $100,000
- Less half of self-employment tax: ~$7,065
- Adjusted Net Earnings: $92,935
- Max Contribution (20% of adjusted): $18,587.
Frequently Asked Questions
Can I have a SEP IRA and a regular Roth IRA?
Yes, you can contribute to both a SEP IRA (as the employer) and a Roth IRA (as the individual), provided your income does not exceed the Roth IRA phase-out limits.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.