Can I Contribute to Both a SEP IRA and Roth IRA?

Yes — you can contribute to both a SEP IRA and a Roth IRA in the same year, and the contribution limits for the two accounts are entirely separate. For 2026, that means employer contributions of up to $72,000 into a SEP IRA and up to $7,500 of your own money into a Roth IRA ($8,600 if you’re 50 or older), provided your income falls within the Roth eligibility range.¹ The IRS treats SEP dollars as employer-provided, so they don’t count against the individual limit that governs your Roth.²

Why the Two Limits Don’t Overlap

The separation comes down to how each account is classified. A SEP IRA receives employer contributions. Even when you’re self-employed, those dollars come from you in your role as the business owner, not as an individual saver. A Roth IRA is a personal account funded with your own after-tax money. Different regulatory buckets, different caps, no interaction between them.³

One wrinkle matters. If you deposit personal, non-employer money directly into your SEP IRA account, those dollars do count against your combined traditional and Roth IRA limit. Putting $2,000 of personal money into your SEP IRA in 2026 leaves you only $5,500 of Roth room, not the full $7,500.¹ Keep the SEP for employer contributions and the Roth for your personal savings, and the math stays clean.

How Much You Can Contribute to Each for 2026

SEP IRA

An employer can contribute the lesser of 25% of an employee’s compensation or $72,000 for 2026.⁴ Employees don’t defer salary into a SEP the way they would with a 401(k); only the employer contributes. The compensation figure used in the 25% calculation is capped at $360,000 for 2026.⁵

If you’re self-employed, the effective rate is lower than 25%, because the contribution itself has to be subtracted from your net earnings before you calculate. The math typically lands closer to 20% of net self-employment income. IRS Publication 560 has the worksheets, and the circular deduction trips people up often enough that it’s worth running the numbers carefully or handing them to a tax professional.

Roth IRA

The base Roth IRA limit for 2026 is $7,500, with a $1,100 catch-up available at age 50 and up for a combined $8,600.⁶ The catch-up rose from $1,000 in 2025, the first inflation adjustment to that figure under SECURE 2.0.

The $7,500 (or $8,600) is a combined limit across all your traditional and Roth IRAs. Putting $3,000 into a traditional IRA leaves you $4,500 of Roth room for the year.⁷

Roth contributions also phase out based on modified adjusted gross income. The 2026 ranges:

Single or head of household: full contribution below $153,000 MAGI, reduced from $153,000 to $168,000, no direct contribution at $168,000 or above.
Married filing jointly: full contribution below $242,000, reduced from $242,000 to $252,000, no direct contribution at $252,000 or above.
Married filing separately: phase-out runs from $0 to $10,000, which shuts most filers out.⁶

Landing inside a phase-out range means calculating a reduced limit proportionally. Landing above the top threshold blocks direct contributions but not conversions, which is where the backdoor Roth comes in.

If Your Income Is Too High for a Direct Roth

There’s no income cap on converting a traditional IRA to a Roth IRA. The backdoor Roth strategy uses this by contributing to a nondeductible traditional IRA and converting it to a Roth shortly after. It’s legal, widely used, and the IRS hasn’t challenged it.

For SEP IRA owners, the pro rata rule creates a serious complication. When you convert traditional IRA money to Roth, the IRS treats all your traditional, SEP, and SIMPLE IRA balances as one pool and taxes the conversion proportionally based on the pre-tax versus after-tax split of that entire pool.⁸

Concrete example: $90,000 sits in your SEP IRA, all pre-tax, and you make a $7,500 nondeductible contribution to a traditional IRA for the backdoor. Your total IRA pool is $97,500, of which 92.3% is pre-tax. Convert that $7,500 and the IRS treats roughly $6,923 of it as taxable income. Most of the benefit is gone.

The usual workaround is rolling the SEP IRA balance into a solo 401(k) or an employer 401(k) before the conversion. 401(k) balances aren’t part of the pro rata calculation. That requires having an eligible plan and getting the sequence right, so anyone with a meaningful SEP balance who wants to use the backdoor should map out the steps in advance.

Deadlines Are Different

SEP IRA contributions for a given tax year can be made up through the due date of the business’s tax return, including extensions.⁹ For a sole proprietor, that generally means April 15 of the following year, or October 15 with an extension. You can also establish a new SEP by the extended deadline and deduct contributions for the prior year, which is one of the more generous features of the account.

Roth IRA contributions for a tax year are due by the individual filing deadline, generally April 15 of the following year. Filing an extension on your personal return does not extend the Roth deadline.⁷ Miss April 15 and the Roth room for that year is gone.

Why Funding Both Is Worth the Effort

SEP dollars are deductible to the business and taxed as ordinary income when withdrawn.¹⁰ Roth dollars get no deduction going in, and qualified withdrawals — contributions and growth — come out tax-free once you’re at least 59½ and the account has been open five years.¹¹ Funding both in the same year gives you a mix of pre-tax and after-tax money for retirement, which lets you manage your tax bracket later by choosing which account to draw from.

Required minimum distributions sharpen the point. SEP IRAs follow the traditional IRA rules: mandatory withdrawals starting at age 73 (rising to 75 in 2033), with a 25% excise tax on any shortfall, reduced to 10% if corrected within two years. Roth IRAs have no RMDs during the owner’s lifetime.¹² You can leave Roth money invested for as long as you like while the SEP handles the mandatory annual draws.

1
Internal Revenue Service. Retirement Plans FAQs Regarding SEPs
2
Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs)
3
Internal Revenue Service. SEP Plan Fix-It Guide – Contributions to the SEP-IRA Exceeded the Maximum Legal Limits
4
Internal Revenue Service. SEP Contribution Limits (Including Grandfathered SARSEPs)
5
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted
6
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
7
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
8
Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
9
Internal Revenue Service. Simplified Employee Pension Plan (SEP)
10
Office of the Law Revision Counsel. 26 U.S. Code 404 – Deduction for Contributions of an Employer to an Employees Trust or Annuity Plan and Compensation Under a Deferred-Payment Plan
11
Internal Revenue Service. Roth IRAs
12
Internal Revenue Service. RMD Comparison Chart (IRAs vs. Defined Contribution Plans)