Self-Employment Retirement Plan Maximum Contribution
Compensation for a self-employed individual (sole proprietor or partner) is that person’s “earned income.”* The starting point to determine the individual’s earned income is the net profit amount from the Schedule C (or Schedule K-1 for a partnership). Use this calculator as a starting point to assess your potential maximum contribution amount for a Self-Employed 401(k), a SIMPLE IRA, or an SEP. *Earned Income = Net Profit – 1/2 of Self-Employment Tax – Contribution
This is a hypothetical example used for illustrative purposes only. This worksheet provides an estimate based on certain assumptions. It is not intended to provide specific investment advice. Distribution rules are similar for most retirement plans, including 401(k) plans, SIMPLE plans, and SEP IRAs. Distributions are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. With 401(k), SIMPLE plans, SEP IRAs, account owners generally must begin taking minimum distributions after reaching age 70½.