SEP IRA Employee Coverage Calculator 2026

Annual employer contributions
Employee	Eligible	Contribution
1	Yes	$5,000.00
2	Yes	$8,000.00

Use your actual plan eligibility terms

This calendar-year roster worksheet handles ordinary W-2 employees under common Form 5305-SEP-style eligibility. Set your plan’s age, prior-service and compensation requirements; the defaults are the maximum restrictions of 21, work in any three of the previous five years, and $800 of 2026 compensation. A plan can include more employees by using less restrictive settings.

Enter each employee, not only the owner

For each card enter age attained during the year, the number of prior five plan years with any work, and full-year eligible W-2 compensation. Even a short period of work can count for a service year. Do not prorate annual compensation merely because eligibility age was reached midyear. The tool shows each failed criterion instead of silently dropping a worker.

Budget a common contribution percentage

Apply one employer contribution rate to every included employee. At 10%, eligible annual compensation of $50,000 and $80,000 produces $5,000 plus $8,000, or $13,000 employer cost. Use the roster to compare rates before committing to a budget. At 25% on $500,000 compensation, the 2026 compensation cap and $72,000 annual contribution cap prevent a $125,000 contribution.

Default plan boundary	Qualifies on that criterion	Does not qualify
Age attained in 2026	21	20
Work years in prior five	3	2
2026 compensation	$800	$799

Confirm special employee classifications separately

Self-employed owners require an adjusted-income calculation rather than this ordinary W-2 method. Leased employees, collectively bargained exclusions and nonresident-alien exceptions need separate review. Do not mark them as automatically excluded by simply entering zero compensation. This roster does not assess plan-document validity, controlled-group requirements or deposits already made; it estimates the annual employer obligation from the supplied ordinary employee facts.

A contribution budget starts with the eligible roster

The employee coverage check answers who may need to be included under the modeled SEP eligibility terms. It is not a way to calculate only the owner’s desired contribution and ignore other staff. Prepare one row per person using the requested age, service and compensation record. Include people whose hours differ or whose employment ended if their record can still satisfy the governing terms. The tool does not import payroll or find missing employees; a correct calculation on an incomplete roster remains incomplete.

Use the actual adopted plan’s terms where the tool asks for a chosen threshold. A SEP document may be less restrictive than the statutory maximum eligibility conditions. Selecting the most restrictive setting because it produces the smallest budget is not evidence that those terms were adopted. Check the document and administrator’s explanation of how service is counted before applying the roster results.

Read employee results before the aggregate total

The roster marks eligibility using the inputs. Review every line before adding the modeled employer amounts. If a fictional roster contains a $40,000 eligible compensation record and a $20,000 eligible record, a 10% illustrative employer rate gives $4,000 and $2,000 before the tool’s applicable caps and scope constraints. The $6,000 total is the sum of those two supported records, not a universal required contribution or a recommendation for an employer rate.

Adding another eligible employee changes the budget even if the owner’s desired contribution stays the same. Removing a row merely to preserve the old total hides an obligation instead of modeling it. Conversely, a displayed zero can reflect an entered ineligible record, a zero rate or missing compensation; inspect the reason rather than treating all zero values as the same conclusion. Keep the roster assumption separate from a final payroll instruction.

Coverage and an owner’s self-employed deduction are different

The employee check is not the complete self-employed owner deduction worksheet. Net earnings, deductible adjustments and the effective contribution-rate calculation can require a separate model. Do not insert business revenue as if it were automatically the employee compensation measure on this page. The tool also does not calculate a complete income-tax return, determine controlled-group treatment, audit compensation definitions or decide whether a person is an independent contractor.

Uniform contribution treatment and exceptions must be checked against the applicable SEP terms. A plan’s inclusion of an employee is not automatically the same as eligibility for a traditional IRA deduction, and an individual employee’s IRA balance is not the employer’s budget. Contributions and notices are administered through the plan and custodian; the output does not create accounts or confirm deposits.

Turn the roster into a verification record

Before acting, compare the entered roster with employee records and the adopted plan. Identify which year the budget represents, what service years were used and which compensation definition the administrator requires. Ask about missing or unusual cases rather than assuming an unchecked box resolves them. Then reconcile any approved funding total with the amounts credited to each employee’s account.

For a site error report, reproduce the branch using made-up employees with fictional ages, service flags and compensation. State which eligibility outcome differed from the source or plan term. Do not send names, dates of birth, tax identifiers or a payroll export to this website. The purpose of the tool is an inspectable coverage and budget exercise; legal plan compliance still requires the full real roster and governing document.

Explanation maintained by the site operator. Methodology and limitations · Report a calculation issue.

Official sources

Rules checked October 5, 2026. Publication 590-A and Publication 560 use 2025 mechanics; indexed 2026 limits use Notice 2025-67.

Frequently Asked Questions

Can the plan include an employee younger than 21?

Yes, if the actual plan uses a less restrictive age requirement. Use that plan setting.

Does working only briefly count for a prior service year?

For the ordinary SEP service requirement, work in any part of a prior year can count. Enter how many of the prior five years qualify.

Does this calculate a self-employed owner’s contribution?

No. Use the SEP IRA calculator’s self-employed worksheet for adjusted net earnings.

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