2nd Job on W2 eligible for SEP-iRA?

Asked by: Brad Martin

Who is eligible to contribute to a SEP IRA?

An employee is eligible to participate in a SEP IRA if he or she is at least 21 years old and has worked for the company in three of the last five years, and received at least $600 in compensation during the year. As an employer, you don’t have to fund contributions every year.

Can you contribute to a SEP IRA if you are no longer self-employed?

If you had an SEP IRA so that you could take advantage of larger contribution limits while you were self-employed, you cannot continue to fund the SEP IRA after you are no longer self-employed. However, you can leave the money in the account to continue to grow tax-free.

How much can I contribute to my self-employed SEP plan if I participate in my employer’s 401 K plan?

For a self-employed individual, contributions are limited to 25% of your net earnings from self-employment (not including contributions for yourself), up to $61, ($58,; $57,).

Can you deduct both IRA and SEP in the same year?

Yes, you can contribute to both a SEP IRA and either a traditional IRA or Roth IRA (presuming you meet income limit requirements) in the same year. The deductibility of traditional IRA contributions may be impacted by the SEP IRA contribution.

Can w2 employee contribute to a SEP IRA?

SEP-IRA contributions are not included in an employee’s gross compensation on Form W-2 (e.g., wages, salary, bonuses, tips, commissions).

How much can my employer contribute to my SEP IRA?

Employer contribution limits

You can contribute up to 25% of the employee’s total compensation or a maximum of $58,000 for the 2021 tax year or $61,000 for the 2022 tax year, whichever is less. If you’re self-employed, your contributions are generally limited to 20% of your net income.

Is there a catch up contribution for SEP IRA?

SEP IRAs do not allow catch-up contributions, unlike some other accounts. The maximum contribution is capped at 25% of an individual’s compensation (with a maximum amount of $58,), per tax year.

How much can I contribute to my SEP IRA 2021?


For 2021, a self-employed business owner effectively can salt away as much as 25% of his or her net income in a SEP IRA, not to exceed the maximum contribution limit of $58,000. (That’s up from the maximum in 2020.)