SEP IRA Contribution Limits
In 2025, you can contribute up to 25% of your net self-employment income, with a maximum of $70,000.
How Much Can You Really Save?
If you’re self-employed or running your own small business, planning for retirement can feel like just one more item on a never-ending to-do list. Taxes, invoices, and client calls are already on your plate. So long-term savings are sometimes pushed aside. The good news is that saving for retirement as your own boss doesn’t have to be complicated.
A SEP IRA (Simplified Employee Pension Individual Retirement Account) is one of the simplest ways for self-employed individuals and small business owners to save for the future. Its contribution limits are a standout feature, typically offering far more saving potential than a Traditional or Roth IRA. Let’s break down what these limits look like, how they work, and why they could matter to you as a self-employed individual.
What is a SEP IRA?
A SEP IRA is a retirement plan designed for self-starters and entrepreneurs, particularly sole proprietors who report business income and expenses on their personal tax return. Unlike Traditional or Roth IRAs, which cap contributions at relatively modest amounts, a SEP IRA allows you to put away a much larger portion of your income, letting you accelerate your retirement savings if you’re earning well. In addition, contributions are considered a business expense, which could help lower your taxable income today.
SEP IRA Contribution Limits for 2025
In 2025, you can contribute up to 25% of your net self-employment income, with a maximum of $70,000. While you can only contribute up to $7,000 ($8,000 if 50 or older) to a Traditional or Roth IRA, SEP IRAs let you put away far more.
Why These Limits Matter
- Catch up faster: If you’ve had years where retirement savings weren’t a priority, the higher SEP IRA contribution limits can help you make up for lost time.
- Flexibility: Contribution amounts can fluctuate with your income. Low-earning years? Contribute less. Big profits? Max out your savings.
- Tax benefits: Contributions reduce your taxable income, offering potentially immediate savings on your tax bill.
Real-World Examples
- Freelancer earning $100,000: 25% of net income = $25,000 contribution
- Strong year with $300,000 net income: Maximum contribution hits the $70,000 cap
By contrast, even if you earn $300,000, you could only contribute $7,000–$8,000 to a Traditional or Roth IRA in 2025. That’s a small slice of what you could be saving. SEP IRAs don’t have that strict limitation. They scale with your income, so when business is booming, your retirement savings can too.
Be Retirement Confident.
Roll over all your old 401(k)s into a PensionBee Individual Retirement Account (IRA). It takes just a few minutes to sign up.
Get startedAdditional Considerations If You Have Employees
If you’re a sole proprietor, SEP IRAs are simple. You only need to focus on your own contributions.
If you have employees, you must include them in the plan if they meet certain criteria:
- Age 21 or older
- Employed for three of the last five years
- Earning at least $750 in 2025
Additionally, you’re required to contribute the same percentage of salary to each eligible employee’s SEP IRA as you do to your own.
Looking to set up a SEP IRA: PensionBee Can Help
A SEP IRA can be a powerful retirement tool, especially if you’re self-employed and want to save more than a standard IRA typically allows. If you want a straightforward, flexible way to save more with higher contribution limits on your own terms, PensionBee’s SEP IRA (available exclusively for solo business owners) could be the retirement solution your business needs. You can start fresh to enjoy tax-advantaged savings and even roll over your old retirement accounts like 401(k)s or IRAs into your PensionBee account. This gives you a clear view of your savings and can help you confidently plan your next steps. Plus, our dedicated account managers, called BeeKeepers, guide you every step of the way, so you can focus on growing your savings and preparing for the retirement you deserve.
Professional Investment Management: The PensionBee Advantage
Some SEP IRA providers leave you to manage investments on your own. This means you are spending time researching investments, rebalancing portfolios, and managing multiple accounts. But at PensionBee, we offer five investment portfolios built with ETFs powered by State Street so that you can benefit from institutional expertise without the complexity. And this means you can focus on growing your business while your retirement savings are professionally managed.
Five Expert-Built Portfolios:
Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.
