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arti465
October 27, 2021
Question

SEP IRA

  • October 27, 2021
  • 1 reply
  • 0 views

Hello,

 

I was a W2 employee until April 2021 and contributed to employer sponsored 401k. 
I became an independent contractor starting May 2021 for the same employer. Can I contribute to SEP IRA? If yes, upto how much can I contribute?

 

Thank you

    1 reply

    O
    OpeA1
    October 27, 2021

    It depends on different thing, but here is what the IRS says:

    "Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of:

    1. 25% of the employee's compensation, or
    2. $57,000 for 2020 and $58,000 for 2021 ($56,000 for 2019)

    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."

     

    Above Reference and more information:https://www.irs.gov/retirement-plans/plan-participant-employee/sep-contribution-limits-including-grandfathered-sarseps 

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