Compensation Percentage

• Employer contributions to the IRA of each employee in a SEP are limited to 25 percent of employee compensation.
  
  The percentage contribution for each employee must be identical. No employee is entitled to receive a higher percentage than another employee.
  
  

Dollar Limit

• Contributions may not exceed a specific dollar limit that is adjusted annually for the cost-of-living. The limit for 2010 is $49,000.
  
  

Excludable Employees

• No SEP contributions are required for employees who may be excluded from the plan. All current employees who provided services in two of the past five years must be included unless they meet one of the exceptions. Any worker may be excluded who is under age 21, has retirement benefits under a union agreement with the employer, or earned less than $550 of compensation in 2010 (adjusted for inflation in future years.)