Business Owners Can Save Far More Than a Regular IRA Allows.
A SEP IRA allows business owners and self-employed individuals to contribute far more than a typical IRA, often with less administrative burden than other plans. We help evaluate whether it's the right fit for your business.
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A regular IRA wasn't built for what your business can actually save.
A SEP IRA lets you contribute a much larger percentage of compensation than a Traditional or Roth IRA allows, with far less paperwork than a typical 401(k). We help evaluate whether a SEP IRA is the right fit compared to other retirement plan options for your business.
- You're self-employed or own a small business
- You want to save significantly more than a regular IRA allows
- You want a plan that's simple to set up and maintain
- You're weighing a SEP IRA against a Solo 401(k)
How Much More Can You Actually Save?
A SEP IRA's contribution ceiling is dramatically higher than a Traditional or Roth IRA — illustrative figures below, subject to annual IRS limits.
Traditional / Roth IRA
SEP IRA formula
SEP IRA (subject to change)
If you have none, or contribute equally
A SEP IRA lets a business owner contribute up to roughly 25% of compensation (about 20% of net self-employment income after adjustments) — often tens of thousands of dollars more per year than a Traditional or Roth IRA allows, subject to the annual IRS cap.
SEP IRA Contribution Estimator
A rough, real-math estimate of your potential SEP IRA contribution ceiling. This is a simplified estimate — your CPA should confirm the exact figure for your entity type.
Simplified illustration only. The exact formula differs for self-employed individuals (based on net self-employment income after certain deductions) versus W-2 employees of a corporation. The actual annual IRS limit changes each year — confirm the current figure with your CPA before contributing.
Traditional IRA vs. Solo 401(k) vs. SEP IRA
Here's how the three most common options for business owners compare.
| Category | Traditional IRA | Solo 401(k) | SEP IRA |
|---|---|---|---|
| Higher Contribution Ceiling | — | ✓ | ✓ |
| Simple to Set Up | ✓ | — | ✓ |
| No Employee Contribution Required | ✓ | ✓ | ✓ |
| Allows Catch-Up Contributions | ✓ | ✓ | — |
| Good Fit With Employees | — | — | ✓* |
← Swipe sideways to see the full table →
*If you contribute for employees, SEP IRA rules generally require an equal percentage of compensation for all eligible employees. Illustrative comparison for educational purposes; confirm specifics with your CPA.
How a SEP IRA Actually Works
This is the simple, 4-step path from "just a regular IRA" to a SEP IRA sized for what your business can actually save.
Entity type, income, and whether you have employees
Working with your CPA to confirm the exact contribution limit
Simple paperwork, often set up in days
Invested according to your overall retirement strategy
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Natalie is a Licensed Financial Professional and Tax Strategist with a career spanning Wall Street, global entrepreneurship, and corporate strategy. She founded Winning in Wealth Now to give professionals, business owners, and retirees a one-stop shop for tax-advantaged strategies, protected growth, and retirement income they can count on.
She has been featured in Yahoo Finance, ABC/FOX, and Black Enterprise, and has guided thousands of individuals and businesses through Winning In Wealth Networks' programs, including Life Architect and the Multi Six Figures Society.
In Plain English
A SEP IRA's contribution ceiling is based on a percentage of your compensation (roughly 25% for W-2 employees of a corporation, or about 20% of net self-employment income for sole proprietors), up to an annual IRS cap — typically far more than the flat dollar limit on a Traditional or Roth IRA.
If you have eligible employees and choose to contribute for yourself in a given year, SEP IRA rules generally require you to contribute the same percentage of compensation for every eligible employee. This is a key factor in whether a SEP IRA is the right fit for your business.
A Solo 401(k) can sometimes allow a slightly higher total contribution and permits catch-up contributions if you're 50 or older, but requires more administrative upkeep. A SEP IRA is simpler to run but doesn't offer catch-up contributions. We'll compare both against your specific numbers.
In many cases, yes — a SEP IRA can often be used alongside a Traditional or Roth IRA, subject to overall contribution and income rules. We'll review how the accounts interact for your specific situation.
SEP IRAs are typically flexible enough to be established and funded up until your business's tax filing deadline, including extensions, for the prior tax year — which makes them a useful year-end planning tool.
Yes. Solo business owners generally have more flexibility, while owners with eligible employees need to account for the equal-percentage contribution requirement, which changes the total cost of the plan. We'll model both scenarios with you.
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