For 2026, the cap is $72,000 and the ordinary employer limit is 25% of eligible employee compensation. Self-employed owners use an adjusted calculation; a nominal 25% plan rate generally becomes 20% of adjusted net earnings.
Eligible employees generally receive the same contribution percentage as the owner. A SEP has no age-based catch-up contribution. Account features and deductibility depend on plan design, including whether Roth SEP contributions are offered.
An example
Hypothetical: a corporation contributes 10% of compensation under its SEP. An eligible employee earning $50,000 generally receives $5,000; the owner cannot use the plan only for their own contribution.
Reviewed October 7, 2026. IRS reference ↗ 2026 retirement limits ↗
This is a general reference. Discuss how the rules apply to your business with your tax professional.