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. Compensation is limited to $290,000 in 2021 and $285,000 in 2020. 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). Return to SEP FAQs