SEP IRA Calculator
Calculate your maximum SEP IRA contribution for 2026 — for self-employed filers (20% of net earnings) or W-2 business owners (25% of compensation), up to the $72,000 IRS limit.
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Additional Details
Your Max 2026 SEP IRA Contribution
Estimated • Based on your inputs
Balance at Retirement
$1,682,107.00
Detailed Breakdown
Disclaimer: This calculator provides estimates for informational purposes only. Results should not be considered financial, tax, or legal advice. Consult a qualified professional for your specific situation.
How This Calculator Works
Calculation methodology and assumptions
A SEP (Simplified Employee Pension) IRA is funded entirely by employer contributions — there is no employee elective-deferral option, unlike a 401(k). For self-employed filers, the deductible contribution is capped at 20% of net earnings from self-employment (net profit minus the deduction for one-half of self-employment tax) — the self-employed equivalent of the 25%-of-compensation rule that applies when contributing on behalf of a W-2 employee (including yourself, if you're an S-corp owner-employee). Both paths are additionally capped at the 2026 overall IRC 415(c) limit of $72,000 and a $360,000 annual compensation limit.
How to Use This Investment & Retirement Calculator
- 1
Fill in Current Age and Retirement Age
Current Age starts at 40; Retirement Age starts at 65. Replace each one with your own figure.
- 2
Fill in Current SEP IRA Balance and Income Type (1=Self-Employed Net Profit, 2=W-2 Salary)
Current SEP IRA Balance starts at $50,000; Income Type (1=Self-Employed Net Profit, 2=W-2 Salary) starts at 1. Replace each one with your own figure.
- 3
Fill in Net Self-Employment Income or W-2 Salary and Expected Annual Return
Net Self-Employment Income or W-2 Salary starts at $120,000; Expected Annual Return starts at 7%. Replace each one with your own figure.
- 4
Read the results
The calculator leads with Your Max 2026 SEP IRA Contribution and Balance at Retirement, followed by 4 supporting figures.
Example Calculation
What the calculator above works from before you change anything: $120,000 of self-employment profit, $50,000 already in the SEP IRA and a 7% return, age 40 to 65.
Self-employment tax is 15.3% of 92.35% of profit (12.4% Social Security on up to $184,500 plus 2.9% Medicare). Subtract half of it from profit to get net earnings from self-employment; the employer contribution can be up to 20% of that figure (IRS Publication 560). Here net earnings are $111,522, so the most you can put in is $22,304 (18.6% of profit).
Result: Contributing that each year, the account reaches $1,682,107 at 65: $557,611 paid in and $1,074,496 of growth on top of the $50,000 you start with.
What Affects Your Results
Rate of Return
Even small differences compound massively over time. 7% vs. 8% over 30 years on $100K means a difference of $200K+. Asset allocation drives your expected return.
Time Horizon
Compounding accelerates exponentially. Most of your wealth is generated in the final years — a 30-year investment earns more in its last 5 years than its first 15.
Contribution Consistency
Regular monthly investments (dollar-cost averaging) smooth out market volatility and ensure you're always buying — including during dips when prices are low.
Fees & Expenses
A 1% annual fee vs. 0.1% fee on a $500K portfolio costs you $4,500/year extra. Over 30 years, high fees can consume 25–30% of potential returns. Use low-cost index funds.
Tips & Best Practices
- Start early. Thanks to compounding, $200/month invested from age 25 to 65 at 8% returns grows to ~$700K. Waiting until 35 cuts that to ~$300K — a $400K penalty for the 10-year delay.
- Don't try to time the market. Research consistently shows that time in the market beats timing the market. Missing the 10 best trading days over 20 years can halve your returns.
- Consider tax-advantaged accounts first: 401(k) (especially with employer match), IRA, HSA. These reduce your tax drag — a 25% tax bracket investor keeps more in a tax-deferred account.
- Rebalance annually. If stocks outperform and grow from 80% to 90% of your portfolio, rebalancing back to 80% locks in gains and manages risk.
- Factor in your state's tax treatment of investment income. Some states exempt certain investment income or have lower rates on capital gains.
StateCalc Team
Editorial Team
The StateCalc team builds financial calculators using data from official government sources including the IRS, U.S. Census Bureau, BLS, and state revenue departments. All formulas are validated by an automated test suite and cross-referenced against published data.
Our editorial standardsFrequently Asked Questions
What is the SEP IRA contribution limit for 2026?
For 2026, the SEP IRA limit is the lesser of 25% of compensation (20% of net self-employment earnings for the self-employed) or $72,000, up to a $360,000 annual compensation cap. There is no catch-up contribution for SEP IRAs, unlike 401(k)s and Traditional/Roth IRAs.
Can I contribute to both a SEP IRA and a Solo 401(k)?
Generally no — most self-employed people choose one or the other, since both are funded by the same 20%-of-net-earnings employer contribution and share the same overall 415(c) limit. A Solo 401(k) usually allows a higher total contribution at lower income levels because it also permits an employee elective deferral, which a SEP IRA does not.
Does a SEP IRA require contributions for employees?
Yes — if you have common-law employees who meet the SEP's eligibility rules (generally: age 21+, worked for you in at least 3 of the last 5 years, and earned at least the SEP minimum compensation for the year), you must contribute the same percentage of pay for them as you do for yourself. This is a key reason many growing small businesses eventually switch to a 401(k) instead.
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