SEP Contribution percentage

Submitted by Maggie Benton on Sat, 2016-02-20 00:24

Hello Folks!

I am having a disagreement with a tax preparer.

Client wants to open a SEP IRA

Client has taken $50K in W2 wages for 2015. He has 3 employees. None are eligible for SEP

I say the company can contribute 20% of his wages; tax preparer says 25%

What say you??

And thank you in advance

Permalink Submitted by Alan - IRA critic on Sat, 2016-02-20 01:07

12,500. He can contribute 25% of W-2 wages as S Corp shareholder. The 20% applies to net self employed income less adjustments.

Permalink Submitted by Maggie Benton on Sat, 2016-02-20 03:43

Thank you Alan… I knew the right answer would come from you with explanation…you are the best