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New Member
posted Jun 1, 2019 11:20:49 AM

Setting the plan contribution rate for a SEP-IRA

Where am I supposed to decide on, and set the plan contribution rate for a SEP-IRA?

0 5 1273
5 Replies
Level 15
Jun 1, 2019 11:20:50 AM

do you have employees ?

New Member
Jun 1, 2019 11:20:51 AM

no, self-employed

Level 15
Jun 1, 2019 11:20:52 AM

There is no place that you need to enter the plan rate itself.  If you mark the Maximize box in TurboTax for a SEP plan, TurboTax assumes the maximum permissible base plan rate of 25% which works out to the maximum permissible SEP contribution for the self-employed of 20% of net earnings.  (Net earnings = net profit minus the deductible portion of self-employment taxes.)  Any contribution less than the maximum permissible implies a base plan rate of less than 25%.  If you make a SEP contribution of less than the maximum permissible you simply enter the amount contributed and do not mark the Maximize box; it doesn't matter what the plan rate actually works out to unless you have eligible employees for whom you also must make SEP contributions.

New Member
Jun 1, 2019 11:20:53 AM

Thanks, this is very helpful.  So there's no fixed % rate that must be used year after year, right?  I can decide which rate (or amount if only me) as long as it's not more than the maximum allowed, and this can vary year to year?

Level 15
Jun 1, 2019 11:20:56 AM

Correct.