How Much Can You Contribute to Your SEP IRA?

The SEP IRA is a more viable option for retroactive tax avoidance. You can contribute up to 25% of your net business income up to a whopping $61,000 per year. The solo 401k has to be opened by December 31, 2022 to be eligible for 2022 contributions.

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One of the trickiest things about investing in retirement accounts is that by the time you know how much you could’ve contributed for a tax break, it’s too late (e.g., you can only make 401(k) contributions through Dec. 31).

But there are a few accounts in the tax-advantaged investing world that allow contributions right up until the tax deadline, making them incredible options for last-minute savings.

After all, I prefer deductions that come from investing over deductions for spending: Why would I spend $100 to save $32 when I could invest (read: keep) $100 to save $32?

Reminder: I’m not a licensed tax professional. Please consult your CPA and do your own research before making big money moves.

Learn more about our sponsor, TaxAct: https://www.taxact.com/moneywithkatie

Transcripts can be found at podcast.moneywithkatie.com.

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Mentioned in the Episode

The Traditional IRA: https://www.irs.gov/retirement-plans/ira-deduction-limits
3 Ways to Lower Your Tax Bill & Navigate Rollover IRA Forms: https://moneywithkatie.com/blog/3-ways-to-lower-tax-bill-rollover-ira-forms
2022 & 2023 IRA deduction limits: https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-not-covered-by-a-retirement-plan-at-work
The Roth IRA: https://www.irs.gov/retirement-plans/roth-iras
Roth IRA Income Limitations: https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022
The Backdoor Roth IRA: https://www.youtube.com/watch?v=QTODFAUIBhY&ab_channel=MoneywithKatie
The Money with Katie Show on building a diversified portfolio: https://youtu.be/qTkVMGi3dFg
SEP IRA Contribution Limits: https://www.irs.gov/retirement-plans/plan-participant-employee/sep-contribution-limits-including-grandfathered-sarseps
Self-employment tax: https://www.ssa.gov/pubs/EN-05-10022.pdf
Solo 401(k) deadline: https://www.mysolo401k.net/solo-401k-faq-when-is-the-deadline-to-open-a-solo-401k-for-2022-and-make-2022-401k-contributions
High-Deductible Health Plans (HDHP): https://www.irs.gov/publications/p969
HSA Contribution Limits for 2022: https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits
Saving on FICA tax via the HSA: https://www.voya.com/voya-insights/importance-educating-employers-hsa-program-fica-savings