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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Adjust values to see instant results
Additional Details
Your Max 2026 SEP IRA Contribution
$23,152.00
Estimated • Based on your inputs
Balance at Retirement
$1,735,728.00
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
Enter your initial investment
Input the lump sum you plan to invest today. This is your starting principal that will begin compounding immediately.
- 2
Set your monthly contribution
Enter the amount you plan to add each month. Consistent contributions accelerate growth through dollar-cost averaging.
- 3
Input expected return and time horizon
Set your expected annual return (7–10% for stocks historically, 4–6% for bonds) and investment period. Longer time horizons amplify compounding effects dramatically.
- 4
Review the growth projection
The results show your total invested amount, earnings from compound growth, and a year-by-year projection table showing how your money grows over time.
Example Calculation
How does compound interest build wealth over time?
Starting with $10,000 and adding $500/month at an 8% average annual return for 30 years: Your total contributions would be $190,000 ($10K initial + $180K in monthly deposits). But with compound growth, your portfolio would grow to approximately $745,000.
Result: Compound interest generated $555,000 in earnings on top of your $190,000 in contributions — nearly 75% of the final value came from returns, not deposits. Starting 5 years later would reduce the final amount by roughly $230,000. Time in the market is the most powerful factor in wealth building.
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.
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StateCalc Team
Editorial Team
The StateCalc team builds free 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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