A Simplified Employee Pension (SEP) or (SEP-IRA) provides business owners with a simplified method to contribute toward their employees' retirement as well as their own.
Contributions are made to an IRA set up for each plan participant and cannot exceed the lesser of:
- 25% of the compensation paid during the year
- $57,000 for 2020 ($56,000 for 2019)
Investment, distribution, and rollover rules are the same as traditional IRAs. You only need to enter SEP IRA contributions made through self-employment work. If your employer made a SEP IRA contribution for you, then you don’t need to enter it in your return. (While you could contribute more to an employer-sponsored SEP IRA, TurboTax doesn’t support these contributions.)
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