Can I Have a SEP IRA and a Roth IRA: Limits, Deadlines, and Taxes

Yes, you can have both a SEP IRA and a Roth IRA, and you can contribute to both in the same year. Federal tax law treats them as separate account types with independent contribution limits, so money going into one does not reduce what you can put into the other. The IRS confirms directly that employer contributions to a SEP IRA do not affect how much you can contribute to a Roth IRA on your own behalf.¹ The only catch is that Roth IRA eligibility depends on your income.

Why the Two Accounts Don’t Conflict

A SEP IRA is a traditional IRA that receives employer contributions under a Simplified Employee Pension plan. A Roth IRA is a personal account you fund with after-tax dollars. Because one is employer-funded and the other is personally funded, they sit under different sections of the rules. You can receive SEP contributions and still make your regular annual Roth contribution, whether you are an employee whose employer runs a SEP or a sole proprietor contributing for yourself.²

2026 Contribution Limits for Each Account

SEP IRA

For 2026, employer contributions to a SEP IRA cannot exceed the lesser of 25% of the employee’s compensation or $69,000.³ The maximum compensation used in the calculation is $360,000. Only the employer funds a SEP; employee salary deferrals and catch-up contributions are not permitted in these plans.

If you are self-employed, you are both the employer and the employee. Your contribution is based on net self-employment earnings after subtracting the deductible portion of your self-employment tax and the SEP contribution itself, which effectively lowers the maximum rate from 25% to roughly 20% of your net earnings before the SEP deduction. Publication 560 has the rate table and worksheet for the exact figure.⁴

Roth IRA

The 2026 Roth IRA contribution limit is $7,500 if you are under 50. At 50 or older, you can add a $1,100 catch-up contribution for a total of $8,600.⁵ The catch-up figure rose from the longtime flat $1,000 because the SECURE 2.0 Act indexed it to inflation starting in 2024.⁶

Note that the $7,500 or $8,600 limit applies to all of your traditional and Roth IRAs combined, not to each one separately. Split a contribution between a traditional IRA and a Roth IRA and the two amounts have to add up to the cap. Employer contributions to a SEP IRA, though, do not count against this personal limit at all.² A self-employed person under 50 could put up to $69,000 into a SEP IRA and another $7,500 into a Roth IRA in the same year: a combined $76,500.

Roth IRA Income Phase-Outs

SEP contributions have no income cap for eligibility, but Roth contributions phase out based on your Modified Adjusted Gross Income (MAGI). For 2026:⁶

Single or head of household: full contribution below $153,000 MAGI, reduced from $153,000 to $168,000, none above $168,000.
Married filing jointly: full contribution below $242,000 MAGI, reduced from $242,000 to $252,000, none above $252,000.
Married filing separately (living with spouse): reduced contribution from $0 to $10,000 MAGI, none above $10,000.

Here is where holding both accounts can work in your favor. SEP IRA contributions reduce your adjusted gross income, and a large SEP contribution can lower your MAGI enough to preserve some or all of your Roth eligibility. Calculate your MAGI using the IRS method, which adds back certain items such as the student loan interest deduction and the foreign earned income exclusion, before you decide how much you can put into the Roth.⁷

Different Deadlines to Fund Each Account

Roth IRA contributions for a tax year must be made by the regular tax filing deadline, typically April 15 of the following year. A filing extension does not extend this deadline.

SEP IRA contributions can be made up to the tax filing deadline including extensions. A six-month extension gives you until October 15 to fund the SEP for the prior tax year.¹ Miss the deadline without an extension on file and you lose the deduction for that year.

How Each Account Is Taxed

SEP IRA contributions are made with pre-tax dollars and reduce your taxable income in the year of the contribution. The money grows tax-deferred, and withdrawals in retirement are taxed as ordinary income.⁸

Roth IRA contributions are made with after-tax dollars, so there is no deduction upfront. In return, the money grows tax-free and qualified withdrawals are tax-free.⁹ A qualified withdrawal requires the account to have been open at least five years and the owner to be at least 59½ (or the distribution to be due to disability or death).¹⁰ Your original Roth contributions can always come out tax- and penalty-free, but early withdrawals of earnings are subject to income tax plus a 10% penalty.⁸

Owning both gives you tax diversification in retirement. You can pull from the SEP in lower-income years and from the Roth in years when you want to keep from moving into a higher bracket.

Required Minimum Distributions Are Different

SEP IRAs require you to start minimum withdrawals at age 73. The first required minimum distribution is due by April 1 of the year after you turn 73; every RMD after that is due by December 31.¹¹

Roth IRAs have no required minimum distributions during your lifetime, so the money can keep growing tax-free for as long as you live.¹² Beneficiaries who inherit a Roth IRA generally do have RMD obligations after your death.

The Pro-Rata Rule Complicates Backdoor Roth Conversions

If your income puts you over the Roth phase-out, you may have considered the “backdoor Roth” route: contribute to a traditional IRA (no income limit on contributions) and convert it to a Roth. Owning a SEP IRA makes this expensive.

Federal tax law requires the IRS to treat all of your traditional IRAs, including SEP IRAs and SIMPLE IRAs, as a single combined account when calculating tax on a conversion or distribution.¹³ You cannot cherry-pick and convert only the after-tax dollars. The taxable share of any conversion is set by the ratio of pre-tax to after-tax money across all your traditional IRA balances.

Say you have $90,000 in a SEP IRA (all pre-tax) and make a $7,500 non-deductible contribution to a new traditional IRA, planning to convert it. Your total IRA balance is $97,500, of which $7,500 (about 7.7%) is after-tax. Convert $7,500 and only about $577 comes over tax-free; roughly $6,923 is taxed as ordinary income. A larger SEP balance makes the ratio worse.

One possible workaround: if you have access to a 401(k) or other employer plan that accepts incoming rollovers, you may be able to roll your SEP IRA balance into that plan first. That removes the pre-tax IRA balance from the pro-rata calculation and leaves the after-tax contribution to convert cleanly. Not every plan accepts these rollovers, so confirm with the plan administrator before you count on it.

The Roth SEP Option Under SECURE 2.0

Starting in 2023, the SECURE 2.0 Act allowed employers to designate SEP contributions as Roth contributions.¹⁴ The contribution is included in the employee’s taxable income for the year (reported on Form 1099-R), but the funds then grow and can eventually be withdrawn tax-free like any other Roth money.

If you are self-employed, you can choose to make your SEP contributions on an after-tax Roth basis rather than the traditional pre-tax basis. You pay tax on the full amount upfront and gain tax-free growth and withdrawals. Not all IRA custodians support Roth SEP contributions yet, so check with your provider. The same 2026 dollar cap applies: the lesser of 25% of compensation or $69,000.³

Fixing an Excess Contribution

Put too much into either account and the IRS charges a 6% excise tax on the excess for each year it stays in the account.⁵ This usually hits Roth IRAs when income rises mid-year and unexpectedly pushes a taxpayer into or past the phase-out.

To avoid the penalty, withdraw the excess plus any earnings it produced by the due date of your return, including extensions. Correct it in time and the excess is treated as if it never happened. Miss the deadline and the 6% tax applies for the year of the excess and every year after until it is fixed.

1
Internal Revenue Service. Retirement Plans FAQs Regarding SEPs
2
Internal Revenue Service. Retirement Plans FAQs Regarding SEPs – Section: If I Participate in a SEP Plan, Can I Contribute to a Roth IRA
3
Internal Revenue Service. SEP Contribution Limits Including Grandfathered SARSEPs
4
Internal Revenue Service. How Much Can I Contribute to My Self-Employed SEP Plan
5
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
6
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
7
Internal Revenue Service. Modified Adjusted Gross Income – Section: Roth and Traditional IRA Contributions
8
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Distributions (Withdrawals)
9
Internal Revenue Service. Roth IRAs
10
Internal Revenue Service. Retirement Topics – Designated Roth Account
11
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
12
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
13
Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
14
Internal Revenue Service. SECURE 2.0 Act Impacts How Businesses Complete Forms W-2