SEP IRA Calculator
Calculates maximum allowable SEP IRA contributions based on self-employment income
25% of net income, capped at $69,000 for 2024
Contribution based on your chosen rate
Estimated savings at 22% tax bracket
Frequently Asked Questions
What is a SEP IRA?
A Simplified Employee Pension (SEP) IRA is a retirement plan for self-employed individuals and small business owners. It allows contributions up to 25% of net self-employment income, with a maximum of $69,000 for 2024. Only the employer contributes; there are no employee deferrals.
How is the SEP IRA contribution calculated for self-employed?
For self-employed individuals, the effective rate is about 20% of net profit (not 25%) because you must first subtract half of self-employment tax. The formula is: net earnings minus half of SE tax, then multiply by 25%.
Can I have both a SEP IRA and a Solo 401(k)?
Yes, but contributions to both are subject to combined limits. Many self-employed individuals prefer a Solo 401(k) because it allows both employee deferrals ($23,000) and employer contributions (25%), often resulting in higher total contributions than a SEP IRA alone.
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