What is the Contribution Deadline for an SEP?

You must make your SEP contribution by the tax filing deadline.

If you are self-employed or own a small business, you can lower your tax liability while putting money away for the future. When you open and fund an SEP-IRA, you can take a tax deduction for the amount you put in, lowering your taxable income and your tax liability. But since the amount you can put into an SEP is determined by your business or self-employment income, it is best to wait until all of the figures are in before finalizing your yearly contribution.


Tax Deadline

The rules governing the SEP-IRA are similar to the guidelines for other types of IRA accounts, including deductible IRAs and Roth IRAs. This means that you do not have to finalize your SEP-IRA contribution by the end of the calendar year. In fact, you might not have all the information necessary to calculate your maximum SEP-IRA, since the amount you can contribute depends on the amount of income you had for the year. You can wait until the April 15 tax filing deadline to make your SEP-IRA contribution for the prior year.


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Filing Extensions

If your business needs to file an extension, that extension also gives you extra time to make your SEP-IRA contribution. If you file a six month extension by the April 15 deadline, you have until October 15 to make your annual SEP-IRA contribution. Be sure to keep careful records of any SEP-IRA contributions you make, including those made before and after the extension was filed.


Self-Employment Income

The SEP-IRA is designed for individuals with income from self-employment or from a small business. If all of your income comes from wages, you cannot contribute to an SEP-iRA. However, if you derive part of your income from wages and part from self-employment, you can contribute to an SEP-IRA. You can contribute to an SEP-IRA even if you contribute to a regular or Roth IRA using wage income. This can lower your tax bill while helping you build up your retirement nest egg.


SEP Calculators

The amount of money you can put into an SEP-IRA is dependent on the income generated by your small business or self-employment activities. The easiest way to determine your maximum SEP-IRA contribution is to use an SEP-IRA calculator. Many mutual funds and brokerage firms that offer SEP-IRA accounts also provide SEP-IRA calculators that business owners and self-employed individuals can use to maximize their contributions. If you use a tax preparation software package, that software might also include an SEP-IRA maximizer that calculates the maximum amount you can put into your SEP-IRA.