2028 SEP IRA Limit
2028 SEP IRA limit: lesser of 25% net SE earnings (effectively 20%) or $71,000 projected. Easy to set up, but Solo 401(k) usually wins for owner-only.
| Net earnings | — |
| 2028 SEP cap | — |
| Effective rate | — |
| 2028 SEP contribution | — |
The 2028 SEP IRA contribution limit is projected at $71,000 or 25% of compensation (lesser). For sole proprietors, the effective rate is ~18.59% of net SE earnings after the SE tax adjustment. S-corp owners use 25% × W-2 wages. SEPs are simple to set up but Solo 401(k)s usually allow higher contributions for owner-only businesses.
SE vs S-Corp Math
Sole prop SEP: 25% × net minus ½ SE tax = effective 18.59% of gross net SE. S-corp SEP: clean 25% × W-2 wages. To max SEP at $71k in 2028 needs ~$284k W-2 wages (S-corp) or ~$382k net SE earnings (sole prop). Tax efficiency favors S-corp at high incomes.
Why Solo 401(k) Wins Owner-Only
Same $71k total cap, but Solo 401(k) allows $24,500 employee deferral REGARDLESS of compensation + 25% employer up to remainder. Owner with $100k W-2: SEP = $25k. Solo 401(k) = $24,500 + $25,000 = $49,500. Solo wins by ~$25k. Solo 401(k) also allows Roth contributions.
Why SEP Wins Multi-Employee
SEPs are dirt simple — no Form 5500 unless assets > $250k. No compliance testing. Annual contribution decision flexible. Must contribute same % for all employees. SEP wins when you have part-time employees you want to include (or exclude via 3-of-5-years rule).
Last updated May 2026. Sources: IRS SEP.