SEP-IRA calculator
Max 2026 SEP-IRA contribution by income and entity type, plus retirement balance projection. 20% effective rate for sole props, 25% for S-corps.
How much can you contribute?
Contribution details (this year)
Retirement balance projection
Retirement income estimate
SEP-IRA math, plain English.
A SEP-IRA (Simplified Employee Pension) is an employer-only retirement plan — there's no employee deferral, just an employer contribution. For self-employed Americans, you ARE the employer, so the contribution comes out of your business net earnings.
- Sole prop / SMLLC — effective rate is 20% of net SE earnings (after deducting half SE tax). The deceptively-cited "25% rule" is actually 25% of net earnings reduced by the SEP contribution itself, which math-collapses to ≈20% of net SE.
- S-corp — straightforward 25% of W-2 wages paid to yourself from the S-corp. Distributions don't count.
- Annual additions cap — capped at $72,000 for 2026 (§415(c)). Compensation considered also capped at $360,000 (§401(a)(17)).
No catch-up on SEP-IRAs — even if you're 50+. That's a reason high earners pair a SEP with a backdoor Roth, or pick a Solo 401(k) instead (which has both employee deferral + catch-up).
SEP-IRA contributions are tax-deductible — they reduce your business income for the year. Withdrawals in retirement are taxed as ordinary income.
The fine print.
- Sole prop math uses the IRS-published deduction worksheet: net SE × 0.9235 (SE base) – half SE tax = net earnings × 20%. Simplified; ignores Social Security wage-base cliffs at very high incomes.
- S-corp math uses 25% of W-2 wages from your S-corp. Owner distributions don't count toward SEP comp.
- $72,000 cap applies even when 25% × wages would be more. High earners hit the cap around $288k W-2 wages (S-corp) or ~$360k net SE (sole prop).
- Compensation considered cap — §401(a)(17) limit of $360,000 for 2026. Income above this is excluded from the 20%/25% calculation.
- Deadline — SEP-IRA contributions can be made until the extended tax filing deadline (typically October 15 the following year). Easier deadline than the 401(k).
- Projection assumes income grows at the rate you specified and you contribute the maximum (or half-max) every year. Balance compounds at the return rate annually with mid-year contribution timing.
Want to compare against a Solo 401(k)? Most people under ~$300k net SE will get more total contribution room from a Solo 401(k) because of the employee-deferral bucket. SEP wins only at compensation high enough to max the 25% rule.