Sep Account Calculator

A SEP Account (Simplified Employee Pension) is a retirement plan for self-employed individuals and small business owners. This calculator helps determine your contribution limits and eligibility for a SEP IRA.

What is a SEP Account?

A SEP IRA is a retirement savings plan designed for self-employed individuals and small business owners. It allows you to contribute a portion of your net earnings from self-employment to a traditional or Roth IRA.

The key features of a SEP IRA include:

Contributions are made on a pre-tax basis, reducing your taxable income
You can contribute up to 25% of your net self-employment income
Contributions are made directly to your IRA
No required minimum distributions (RMDs) until age 70½

SEP IRAs are different from 401(k) plans. While both are retirement savings options, SEP IRAs are specifically designed for self-employed individuals and small business owners.

How to Use This Calculator

To use this SEP Account Calculator:

Enter your net self-employment income for the year
Select your contribution percentage (typically 20-25%)
Click "Calculate" to see your maximum contribution amount
Review the results and adjust as needed

The calculator will show you both the maximum allowed contribution and your actual contribution based on your selected percentage.

Formula Used

The maximum SEP IRA contribution is calculated as:

Maximum Contribution = Net Self-Employment Income × Contribution Percentage

Where:

Net Self-Employment Income is your income from self-employment after deductions
Contribution Percentage is the percentage you choose to contribute (typically 20-25%)

The maximum allowed contribution is 25% of your net self-employment income, but you can choose to contribute less if you prefer.

Worked Example

Let's say you have $120,000 in net self-employment income and you want to contribute 20% to your SEP IRA.

Using the formula:

Maximum Contribution = $120,000 × 20% = $24,000

This means you can contribute up to $24,000 to your SEP IRA this year.

Income	Contribution %	Maximum Contribution
$120,000	20%	$24,000
$150,000	25%	$37,500

Frequently Asked Questions

What is the maximum I can contribute to a SEP IRA?: The maximum contribution is 25% of your net self-employment income, up to $66,000 in 2023.
Can I contribute to both a SEP IRA and a 401(k)?: Yes, you can contribute to both if you're self-employed and have employees. However, you can't contribute to both if you're only self-employed.
When can I withdraw money from my SEP IRA?: You can withdraw money at any time, but you'll owe income tax and possibly a 10% early withdrawal penalty if you're under 59½.
Is there an age limit to contribute to a SEP IRA?: No, there's no age limit to contribute to a SEP IRA. You can contribute as long as you're self-employed and meet the other requirements.
Can I roll over a SEP IRA to an IRA?: Yes, you can roll over a SEP IRA to a traditional IRA or Roth IRA, but you must do so within 60 days of the end of the year the contributions were made.