I have a client who owns three separate LLCs and each generates self-employment income and we are in process of establishing a SEP-IRA for each business, but I am not entirely clear how the maximum SEP-IRA contribution is determined for each entity since his total self-employment earnings exceeds $285k for 2020.

Here is the summary of SE earnings by entity, but I’m not sure if the $285k income limit and the $57k maximum SEP IRA contribution should be prorated based on each entity’s proportionate share of the Net SE Earnings or if this should be determined differently.

Entity A $200,000 of SE Earnings & Net of 50% SE Tax = $192,613
Entity B $100,000 of SE Earnings & Net of 50% SE Tax = $96,307
Entity C $50,000 of SE Earnings & Net of 50% SE Tax = $48,153
Total $350,000 of SE Earnings & Net of 50% SE Tax = $337,073

If the $285k SEP-IRA income limit is prorated based on each entity’s share of the total net SE Earnings, then the SEP contribution would be determined as follows:

Entity A Proportionate Share of SEP-IRA Earnings = 162,857 x 20% = 32,571 SEP contribution
Entity B Proportionate Share of SEP-IRA Earnings = 81,429 x 20% = $16,286 SEP contribution
Entity C Proportionate Share of SEP-IRA Earnings = 40,714 x 20% = $8,143 SEP contribution
Total SEP-IRA Earnings = 285,000 x 20% = $57,000 Total SEP contribution

Is this summary correct or should the allowable SEP contribution be allocated to each entity differently? Thanks!