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SEP Plan FAQs - Compensation

What compensation is included in determining SEP contributions for an employee?

For an individual who is not self-employed, compensation included in determining SEP contributions includes:

  • wages, tips, and other compensation from the employer subject to income tax withholding under section 3401(a),
  • amounts described in Internal Revenue Code Section 6051(a)(8), including elective contributions made under a SIMPLE IRA plan, and
  • compensation deferred under a 457 plan.

Compensation doesn’t include amounts deferred under a section 125 cafeteria plan.


What compensation is included in determining SEP contributions for a self-employed individual?

For purposes of the SEP plan rules, a self-employed individual’s compensation means net earnings from self-employment determined under Internal Revenue Code section 1402(a).

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Page Last Reviewed or Updated: 18-Dec-2013