Employees are not allowed to make elective contributions to a SEP IRA. Only employers can contribute. Employers have to contribute the same percentage of compensation for all eligible employees, including owners (partners, shareholders, members).
If you are filing an 1120-S for an S-Corp, contributions are made by the business based on W-2 compensation, not on S Corp profits or shareholder distributions, and are deductible on Form 1120-S, Line 17. You report the SEP IRA contributions by going to:
- Federal Taxes
- Deductions
- Compensation and Benefits
- Select "Retirement plan contributions"
- Indicate you have already Already contributed...
- Enter total contributions
If you are filing Form 1065 for a partnership, The percentage of compensation contributed must be the same for all eligible participants, including the partners.
To Report SEP IRA contributions for Employees in TurboTax, go to:
- Federal Taxes
- Deductions
- Employee compensation and benefits
- Retirement
Note: Partner contributions and employee contributions to a SEP are treated differently and entered in different places.
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