Yes, both of you can open a SEP-IRA for yourselves and the plans are based on your individual wages.
The contributions you make to each employee's SEP-IRA each year cannot exceed the lesser of:
- 25% of compensation, or
- $56,000 for 2019
- $57,000 for 2020
Future year limits will be adjusted for inflation.
SEP plans do not allow for catch up contributions, but some SEP-IRA plans do.
If your SEP-IRA permits non-SEP contributions, you can make regular IRA contributions (including IRA catch-up contributions if you are age 50 and older) to your SEP-IRA, up to the maximum annual limit. However, the amount of the regular IRA contribution that you can deduct on your income tax return will be $0 due to your participation in the SEP plan and your total income.
As you can see the there are a lot of factors to consider with these plans. Depending on the rules of the plan, which you would have to discuss with your plan administrator, you may be able to contribute more than the maximum, but part of your contribution would not be deductible.
Turbo Tax has an excellent section on employee retirement plans which is easy to use for planning.
- Just use the search box in the upper right corner and search for "SEP account".
- Click on the Jump to link.
- Check the "Maximize my deduction" box and the program will calculate your maximum contribution and deduction based on the information in your return.
If you use the section for planning, be sure to delete or correct you entries before you file your return.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
