Business Owner
intermediate · $50K - $100K
A Simplified Employee Pension IRA lets self-employed individuals contribute up to 25% of net self-employment income, max $72,000 (2026).
Easier to set up than Solo 401(k), but no employee contributions or loans.
Annual Limit
25% of net SE income, max $72,000 (2026)
Key takeaways
- Lets the self-employed contribute up to 25% of net self-employment income (about 20% of Schedule C profit), max $72,000 (2026).
- Contributions are employer-only, and you must cover eligible employees if you have any.
- Simpler to administer than a Solo 401(k), but with no employee deferral, no Roth option, and no loans.
- You can fund it up until your tax filing deadline, including extensions.
Requirements
- Self-employment income or own a business
- Must cover eligible employees (if any)
- Contributions are employer-only
How to Implement
- 1Open a SEP IRA at a brokerage that offers one
- 2Calculate 25% of net self-employment income
- 3Contribute by tax deadline (including extensions)
- 4Deduct contributions on tax return
The bottom line
A SEP IRA is the simplest way for the self-employed to shelter a large share of income, at the cost of the flexibility a Solo 401(k) offers. It is employer-funded and easy to open.
Frequently Asked Questions
Featured Providers
- Fidelity
- Vanguard
- Schwab
Related business owner strategies
Sources
- Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
- Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
- Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.