No, you would not subtract the amount from taxable wages on Forms 941, and 940. If you are an LLC member and your company has made an election to be treated for tax purposes as an S Corp, SEP contributions can be deducted on Form 1120S. This means you will be treated the same as any other employee. When an employer contributes to an employee's SEP-IRA account, the contribution can be deducted as a business expense on the appropriate form.
Unlike some other retirement plans, a SEP IRA allows only the employer to contribute. And whatever percentage of compensation employers set aside in the plan for themselves is the same percentage of pay they must contribute for each eligible employee.
For 2021, a self-employed business owner effectively can contribute as much as 25% of his or her net income in a SEP IRA, not to exceed the maximum contribution limit of $58,000. In comparison, a traditional IRA limits contributions to $6,000 for 2021 for those younger than 50, or $7,000 for those 50 or older.
To be eligible to participate in an employer's SEP IRA, employees must be at least 21 years old, have worked at the business for three of the past five years and have earned at least $650 from the job in 2021.
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