what is the limit for a sep ira
SEP IRA Contribution Limits. The 2015 and 2016 SEP IRA contribution limit is $53,000. For incorporated businesses, compensation is based on W-2 income. Annual contributions can be made into a SEP IRA up to 25% of W-2 income. For those taxed as sole proprietors compensation is based on adjusted earned income. Adjusted earned income is determined by completing an IRS worksheet. SEP IRA contributions of 20% of adjusted earned income can be made annually. In 2015 and 2016 annual compensation of more than $265,000 cannot be taken into consideration for determining contributions. Contributions to a SEP IRA are generally 100% tax deductible and investment earnings in a SEP IRA grow taxed deferred.