<<According to IRS Pub. 560, "salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes" when applied to a SIMPLE IRA.>>

But these are the rules for a Salary Reduction SEP (or SARSEP). They are NOT the rules for a basic contributory SEP.

Under the old rules, a SARSEP was what small employers were using instead of a deferred compensation plan (such as a 401k). And the wages that the employee elected to defer WERE subject to employment taxes. But the contribution made by the employer was not.

In addition, no new SARSEPS are allowed. They have been replaced by the SIMPLE plan.

<<If I was to contribute $6000, would I really be contributing the maximum allowable? To contribute the maximum possible, do I need to take into account the taxes which will be withheld and thus contribute more than $6000?>>

Without knowing more about your situation, I can't tell you if you are making the maximum contribution or not. But what I can tell you is that if these are the EMPLOYER contributions from a traditional SEP, they will not be subject to employment taxes.

TMF Taxes
Roy