Any employer, including self-employed individuals, can establish a SEP plan. Contributions an employer can make to an employee’s SEP-IRA cannot exceed the lesser of $57,000 or 25% of the employee’s compensation. Compensation is limited to $285,000 in 2020. You cannot make Roth contributions to SEP IRAs. A SEP IRA won’t prevent you from contributing to either a Roth IRA or a Traditional IRA. However, access to a workplace retirement plan might impact if you can deduct Traditional IRA contributions.
A Self Employed Plan IRA account or a SEP IRA has different contribution limits than a Traditional or Roth IRA.
For 2020, SEP IRA contributions cannot exceed the lesser of:
1. 25% of the employee’s compensation, or
2. $57,000 for 2020 ($56,000 for 2019)
For 2019, SEP IRA contributions cannot exceed the lesser of:
1. 25% of the employee’s compensation, or
2. $56,000 for 2020 ($56,000 for 2019)
For additional information on contributing to a SEP IRA, please visit: