As the plan sponsor of a SEP IRA, you have the flexibility to determine if and how much to contribute to your SEP plan each year. However, all eligible participants in the plan must receive the same percentage of their compensation as a contribution (e.g., 3% of compensation) and the amount they can receive is limited by the IRS.
SEP IRA contribution limits
Contributions made to a participant’s SEP IRA account cannot exceed the lesser of:
25% of the employee's eligible compensation (limited to the SEP maximum compensation cap established by the IRS each year), or
20% of a self-employed individual’s net earnings from self-employment for the applicable tax year, or
SEP maximum contribution dollar amount limit, subject to cost of living adjustments (COLA) by the IRS
When can SEP IRA contributions be made?
The deadline to make SEP IRA contributions is by your business’s tax return due date, plus any applicable extension. If a contribution is made to the SEP IRA, the employer or administrator must notify eligible employees in writing by January 31 of the following year or 30 days after the contribution was made, whichever is later.
For more information regarding SEP contributions, please visit the IRS website.