SEP IRA Calculator: Project a Self-Employed Retirement Balance
Project how a SEP IRA could grow — the retirement account that lets the self-employed and small-business owners contribute well beyond regular IRA limits.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year growth schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Future value | Total contributions | Total interest earned |
|---|---|---|---|
| $30k · $1k/mo · 7% · 25yr | $981,834.24 | $330,000.00 | $651,834.24 |
| $0 · $1.5k/mo · 8% · 20yr | $883,530.62 | $360,000.00 | $523,530.62 |
| $120k · $2k/mo · 6% · 15yr | $876,128.65 | $480,000.00 | $396,128.65 |
| $50k · $800/mo · 7% · 30yr | $1,381,801.67 | $338,000.00 | $1,043,801.67 |
How This Calculator Works
Enter the current SEP IRA balance, the average annual return you expect, the years until retirement, and your monthly contribution. The calculator compounds the balance monthly and adds each contribution, showing the projected balance and the growth.
The Formula
Future Value with Regular Contributions
P = starting amount, PMT = monthly contribution, r = monthly rate (annual ÷ 12), n = number of months
Worked Example
With $30,000 saved, $1,000 added monthly, and a 7% average return over 25 years, a SEP IRA reaches about $981,800. Contributions account for $330,000; investment growth supplies the rest.
Key Insight
The SEP IRA's appeal is its high contribution ceiling — far above a regular IRA — which lets self-employed earners save aggressively in strong years. Contributions are pre-tax, so withdrawals in retirement are taxed as income.
SEP IRA vs Solo 401(k) for self-employed
Two major options for self-employed retirement: SEP IRA and Solo 401(k). Key comparison.
SEP IRA: contribution limit 25% of compensation (capped $69K 2024); simple administration; no employee elective deferrals (employer/owner contributions only). Best for: self-employed who want simplicity; income above $300K where 25% × $300K = $69K limit anyway; high-income self-employed.
Solo 401(k): contribution limit = employee elective deferral ($23K + $7.5K catch-up if 50+) PLUS employer contribution up to 25% of compensation. Combined limit: $69K 2024 (same as SEP). Allows Roth contributions on elective deferral portion. Best for: self-employed with income $50K-$200K range where elective deferrals matter; those wanting Roth option; those wanting plan loans (SEP doesn't allow).
Net comparison: for income above $300K, both reach $69K limit — choose by simplicity (SEP) or feature set (Solo 401(k)). For income $100-$300K, Solo 401(k) typically allows higher total contribution. For income below $100K, Solo 401(k) substantially better due to elective deferral component.
SEP rules when you have employees
Major constraint of SEP IRA with employees: must contribute SAME PERCENTAGE for all eligible employees as for owner. If owner contributes 20% of own income, must contribute 20% of each eligible employee's compensation.
Eligibility: employees must have worked 3 of past 5 years; be age 21+; earned $750+ (2024 threshold). Part-time and seasonal workers may be excluded based on this criteria. Many small businesses delay SEP setup until they have 'permanent' core employees to avoid SEP contributions to short-term/part-time workers.
For solo-owner businesses (no employees): SEP is highly flexible — contribute up to 25% of compensation in good years; reduce or skip in lean years. No annual filings required (vs Solo 401(k) which requires Form 5500-EZ when assets exceed $250K).
When business adds first employee: SEP IRA may become uneconomic (must include employee in contributions). Many self-employed owners switch to Solo 401(k) (which can exclude part-time employees under 1000 hours/year) or SIMPLE IRA (more flexible employee inclusion rules) when this transition occurs.
Self-employed retirement plans comparison (2024)
Reference U.S. self-employed retirement plan options and contribution limits.
| Plan | Max contribution 2024 | Best for | Notes |
|---|---|---|---|
| SEP IRA | 25% × comp / $69K cap | Simple, high-income solo | Same % for employees |
| Solo 401(k) | $23K + 25% × comp / $69K cap | Most self-employed | Allows Roth, loans |
| SIMPLE IRA | $16K + $3.5K catch-up + 2-3% match | <100 employees, simple | Lower contribution limit |
| Defined Benefit | $275K+ depending on age | Very high income late career | Complex; requires actuary |
| Cash Balance | $200K+ depending on age | Combined with 401(k) | Complex; for max savings |
| Traditional IRA | $7K + $1K catch-up | Anyone with earned income | Lowest limit; widely available |
For most self-employed individuals with modest income variation, Solo 401(k) provides the best flexibility and feature set. SEP IRA wins on simplicity. SIMPLE IRA is intermediate option. Defined Benefit and Cash Balance plans are for very high income individuals seeking maximum tax-advantaged saving — typically requires professional administration and substantial annual costs.
Frequently Asked Questions
What is a SEP IRA?
A SEP IRA is a retirement account for the self-employed and small-business owners. It allows much larger contributions than a regular IRA, tied to business income.
How much can I contribute?
The SEP IRA limit is a percentage of compensation up to an annual IRS cap, well above the standard IRA limit. The exact amount depends on your earnings.
How is a SEP IRA taxed?
Contributions are pre-tax and reduce taxable income now; growth is untaxed until withdrawal. Withdrawals in retirement are taxed as ordinary income.
Who can open a SEP IRA?
Self-employed individuals and small-business owners. If a business has employees, the owner must generally contribute for eligible employees too.
SEP IRA or solo 401(k)?
Both suit the self-employed. A solo 401(k) can allow larger contributions at lower incomes and permits loans; a SEP IRA is simpler to run. The best choice depends on the situation.
When is this calculator unreliable?
When SEP IRA isn't the optimal plan choice — for most self-employed with income under $300K, Solo 401(k) typically allows higher total contributions due to elective deferral component. Also unreliable when business income fluctuates substantially (SEP requires same contribution percentage to employees as owner; high-variance income complicates planning).
References & Authoritative Sources
- Internal Revenue Service (IRS) — SEP — Simplified Employee Pension · consulted June 1, 2026 · Federal regulator on SEP IRAs
- U.S. Small Business Administration (SBA) — Retirement Plan Options for Small Business · consulted June 1, 2026 · SBA guidance on small business retirement plans
- Vanguard — Small Business Retirement Plans — SEP IRA Information · consulted June 1, 2026 · Industry guidance on self-employed retirement
Related Calculators
Data Sources & Benchmarks
This calculator draws on 3 independent, dated sources. The starting values for expected annual return are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
SEP IRA growth uses compound interest with regular contributions. The calculator returns balance projection. SEP IRA (Simplified Employee Pension) is U.S. retirement plan for self-employed and small business owners. 2024 contribution limit: lesser of 25% of compensation OR $69,000 (substantially higher than traditional IRA $7K limit). Contributions tax-deductible; growth tax-deferred; withdrawals taxed as ordinary income in retirement. Required: pro rata contributions for employees if any. RELIABILITY: Reliable for documented self-employed income and contribution. Less reliable when business income fluctuates substantially (SEP requires consistent contribution percentage across employees including owner; high-variance income complicates planning) or when comparing to other self-employed options (Solo 401(k), SIMPLE IRA each have different advantages).
Updated