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I feel I must chime in here.

IRS Publication 590 is very clear on the contribution limits for self-employed SEP contributors.

The original poster is quite right, with one semantic change. It is limited to 13.0435% of self employment income less one-half of self employment tax owed, not paid. The calculations are pretty easy if you follow the 1040, Schedule C, and Pub 590 instructions.

Note that you can always make an employee contribution up to $2,000 more to your IRAs (including the SEP). However, the full amount may not be deductible because you're covered under an employer-sponsored retirement plan (the SEP).

It does seem that you ought to be able to contribute the full 15% but deduct less, but the language is quite clear in this case.

- LoopinFool
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