How much can I contribute to my self-employed SEP plan if I participate in my employer’s SIMPLE IRA plan?
The contribution limits for your SIMPLE IRA plan are separate from the limits for your SEP plan. Assuming you are not also an owner of your employer’s business, you can contribute the maximum to both plans.
SIMPLE IRA plan limits
You can make salary deferrals (salary reduction contributions) of up to $12,500 to a SIMPLE IRA plan (in 2015, 2016, and 2017). If you’re age 50 or over, you can contribute an additional $3,000 (in 2015, 2016, and 2017) in catch-up contributions.
If you participate in more than one retirement plan that allows you to make salary deferrals (such as a 401(k) or a 403(b) plan), your total annual employee contributions to all the plans can’t exceed your personal limit of $18,000 (in 2015, 2016 and 2017), plus an additional $6,000 (in 2015, 2016, and 2017) if you're age 50 or older. However, because the SIMPLE IRA plan limits your contributions to $12,500, plus an additional $3,000 catch-up contribution, this is the maximum amount you can contribute to your SIMPLE IRA plan.
Your employer must either:
- match your salary deferrals, on a dollar-for-dollar basis, up to 3% of your compensation, or
- make a nonelective contribution of 2% of your compensation (taking into account no more than $270,000 of compensation in 2017 ($265,000 in 2015 and 2016).
SEP plan limits
Your contributions to your SEP plan (that is not a SARSEP) are not reduced by the contributions you or your employer make to your employer’s SIMPLE IRA plan.
SEP plans (that are not SARSEPs) only allow employer contributions. For a self-employed individual, contributions are limited to 25% of your net earnings from self-employment (not including contributions for yourself), up to $54,000 (for 2017; $53,000 for 2015 and 2016). You can calculate your plan contributions using the tables and worksheets in Pub. 560.
If your business sponsors another defined contribution plan in addition to your SEP plan (for example, a profit-sharing plan or a 401(k) plan), then your contributions for yourself to all these plans may not exceed 25% of your net earnings from self-employment (not including contributions for yourself), up to $54,000 (for 2017; $53,000 for 2015 and 2016). Note that salary deferrals are not subject to the 25% limit and catch-up contributions are not included in the $54,000 limit.
- SEP Plans
- SIMPLE IRA Plans
- How much salary can you defer if you're in more than one retirement plan?
- Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
- Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)