topic SEP IRA eligibility and contributions in Get your taxes done using TurboTax

SEP IRA eligibility and contributions

StephA — Tue, 10 Feb 2026 08:54:31 GMT

If I opened a SEP IRA because I was self employed one year, but in a later year only have W-2 income from another employer, is it possible to make contributions to the SEP IRA with that W-2 income? Or can I only make contributions to a SEP IRA from any self employment income I make each year? I’d also like to know vice versa - if I only have self employment income one year, can I make contributions from that income to a traditional or Roth ira even if I also have a SEP IRA? And if I open a SEP IRA can I max out both SEP IRA contribution limits (25% net income or $66,000) AND Traditional or Roth contribution limits ($6,500) in a single tax year? So for instance, if I made $20,000 net income as self employed, can I contribute $5,000 to the SEP IRA and then $6,500 of my income from my other W-2 job to my Traditional or Roth Ira, for a total of $11,500 in retirement contributions for that year?

Re: SEP IRA eligibility and contributions

Bsch4477 — Wed, 31 Jan 2024 22:47:25 GMT

You can’t make a SEP contribution from your W-2 income but you can make a traditional IRA contribution from that income. Since both IRA’s are subject to the same withdrawal rules you can merge those two IRA’s.
If you are self employed you can contribute to both a SEP IRA and another IRA, each within each of its own contribution limits.

Re: SEP IRA eligibility and contributions

StephA — Wed, 31 Jan 2024 22:54:43 GMT

Great, thank you!
I have two follow up questions:

1. When I went through TurboTax I didn’t see any option for a SEP IRA to put in my deductible contributions, in addition to my Trad IRA deductible contributions. Where do I find this?

2. If I have a SEP IRA Plan and in later years decide to employ a couple independent contractors where I file the 1099-NEC at tax time, are they considered “eligible employees” where I must open and make equal contributions to a SEP plan of their own? Or does this only apply to employees who get a W-2 from my business every year?

Re: SEP IRA eligibility and contributions

AmyC — Wed, 31 Jan 2024 23:03:21 GMT

1. The SEP IRA is limited to business owners and is on the business schedule.

2. Contractors do not count for the SEP IRA requirements. They could set up their own. W2 employees must be accounted for based on the rules.

See SEP IRA information