SEP IRA Calculator
Translate net business profit into a SEP contribution sketch — pick a contribution percent (default ~20% as a practical stand-in for the 25% rule) and an annual cap. Click any i for detail.
Business profit & SEP
Net business profit ($)
i
Net profit
Schedule C / net earnings sketch before the SEP contribution itself. |
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|---|---|
Contribution (% of profit)
i
Contribution %
Default ~20% approximates self-employed 25%-of-compensation math after the contribution circularity; 25% is also common on W-2-style bases. |
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Annual cap ($)
i
Annual cap
Editable overall SEP dollar cap (educational). |
How to use this calculator
- Enter net business profit.
- Set contribution percent (try 20% or 25%).
- Set the annual dollar cap.
- Read the capped contribution.
Results explained
Headline is min(profit × %, cap). The note explains why self-employed planners often use ~20% of net profit instead of a raw 25%.
Quick reference: SEP sketch
Not a substitute for Pub 560 worksheets.
| Item | Detail |
|---|---|
| Default % | 20% of net profit |
| Alt sketch | 25% on a compensation base |
| Cap | User-editable annual limit |
Employees in a SEP generally require the same % — solo owners still model carefully.
How the estimate is built
Contribution = min(net profit × contribution%, annual cap).
Example scenario
$120,000 net profit × 20% = $24,000, under a $72,000 cap.
FAQ
Why 20% not 25%?
For self-employed, 25% applies to compensation after the contribution; ~20% of pre-contribution profit is a common shortcut.
Can I also do a solo 401(k)?
Usually one primary plan design — compare with the solo 401(k) calculator and a tax pro.
Deadline?
SEP contributions often track the tax-filing deadline including extensions — confirm IRS timing.