SEP Contribution Limits (including grandfathered SARSEPs)
Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of:
- 25% of the employee's compensation, or
- $53,000 (for 2015 and 2016, $54,000 for 2017)
Note: Elective salary deferrals and catch-up contributions are not permitted in SEP plans.
If you’ve contributed more than the annual limits to an employee’s SEP-IRA, find out how to correct this mistake.
SARSEPS (established before 1997)
Participants in Salary Reduction Simplified Employee Pension (SARSEP) plans established before 1997 were entitled to make elective salary deferral contributions. For these plans that are still in operation, a participant’s elective deferral contributions are limited to $18,000 (in 2015 - 2017) or 25% of their compensation, whichever is less. Catch-up contributions are not subject to this limit. The overall contribution limit (including both employer and employee contributions, but excluding catch-up contributions) is the same as the SEP limit, above.
- Simplified Employee Pension (SEP)
- Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
- Publication 4333, SEP Retirement Plans for Small Businesses
- FAQs for SEPs