The most an employer can contribute to a SEP in 2020 is 25% of compensation up to $57,000. There is no catch-up contribution for participants over 50 years old. Additionally, only employers can contribute to SEP accounts. Employees may not make contributions.
SEPs are also called SEP IRAs or Simplified Employee Pension Individual Retirement Arrangements (SEP IRAs).
How Does This Work?
If you make $200,000 per year, the maximum your employer can contribute to your SEP is $50,000. If you make $250,000 per year, the maximum your employer can contribute to your SEP is $57,000, the limit for 2020 contributions.
What is the Deadline for SEP Contributions?
Employers must adopt the SEP plan and contribute to SEP accounts by the tax filing deadline, typically April 15. However, this deadline may be later if the employer files an extension.
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