SEP IRA contributions

Submitted by Zachariah Hammel on Tue, 2025-02-25 16:44

I have a client who is telling me her accountant is stating that SEP IRA contributions are based off her net income and not her gross, that doesnt sound accurate to me and online there is a lot of gray area, can you help out on this?

 

Thanks



Submitted by Alan - IRA critic on Tue, 2025-02-25 16:57

If she is self employed, the max SEP contribution is based on 20% of net profit less 1/2 the SE tax. Therefore, accountant is correct.

If she is taxed as an S Corp, then the contribution is 25% of herW-2 wages.

Also, there is a 69,000 cap for 2024 per Sec 415c.

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