{"id":535037,"date":"2026-01-22T17:10:08","date_gmt":"2026-01-22T17:10:08","guid":{"rendered":"https:\/\/www.europesays.com\/us\/535037\/"},"modified":"2026-01-22T17:10:08","modified_gmt":"2026-01-22T17:10:08","slug":"i-own-a-pool-company-in-phoenix-and-max-my-ira-each-year-i-think-a-sep-might-be-better-for-retirement-savings-but-my-cpa-told-me-no-whos-right","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/535037\/","title":{"rendered":"I own a pool company in Phoenix and max my IRA each year. I think a SEP might be better for retirement savings, but my CPA told me \u2018no.\u2019 Who\u2019s right?"},"content":{"rendered":"

Question: <\/strong>\u201cI am a small business owner. I have a pool service in Phoenix, Arizona. I contribute to an IRA and max it out every year. I have heard about a SEP retirement account but my CPA says I am not eligible to fund that. I am doing business as an LLC with an S Corp designation and I take a payroll check. I have done a fair amount of research on the matter and I can\u2019t find anything that says I\u2019m not eligible. Is this accurate? Who can help give me some guidance in this department?\u201d<\/p>\n

Answer:<\/strong> Based on what we know, it\u2019s likely that you\u2019re eligible to contribute to a SEP IRA \u2014 but you\u2019ll likely want to consult a financial adviser and a CPA to make sure you\u2019re doing it right. You can find advisers at CFP Board, NAPFA or use this free tool to get matched with a fiduciary adviser<\/a> from our ad partner SmartAsset. To find CPAs, seek referrals from friends, colleagues, your financial adviser or use the National Association of Tax Professionals (NATP) directory<\/a> to filter candidates by location and expertise.<\/p>\n

SEP IRAs are powerful as they allow business owners to contribute more than a traditional IRA. That said, once you add your employees to a SEP IRA, the compliance and cost implications can add big hiccups. \u201cThis is a good time to get a second opinion from a CFP professional who understands how retirement plans work for small business owners operating as LLCs with S Corp elections,\u201d says Dustin Suttle, certified financial planner at Suttle Crossland Wealth Advisors.<\/p>\n

To be eligible for \u2014 and contribute to \u2014 a SEP IRA, business owners must follow specific rules, explains Andrew Rotz, certified financial planner at Fruitful. For LLCs taxed as S corporations, SEP contributions must be made as employer contributions from the business account and are limited to up to 25% of the owner\u2019s W-2 compensation, capped at the annual SEP contribution limit ($72,000 for this year), says Rotz.<\/p>\n

What\u2019s more, he says differences between LLCs and S-Corps can pretty easily get muddled, and if a CPA or financial adviser doesn\u2019t work with them regularly, they may confuse some of the IRS Pub 560 rules. \u201cYou will effectively be making contributions to the SEP IRA as an employer and contributions to your traditional IRA as an employee. I\u2019d recommend having your current CPA review IRS Pub 560 and have a discussion with you, or explore interviewing a few other CPAs who may be more knowledgeable in this area if this is an avenue you decide to pursue,\u201d says Rotz.<\/p>\n

For his part, certified financial planner Brad Lineberger at Seaside Wealth Management says should you decide to go the SEP IRA route, you\u2019re allowed to make a contribution all the way up until the tax filing date plus extension. \u201cThere is a formula to determine how much you can contribute to your SEP and it\u2019s based on your income,\u201d says Lineberger.<\/p>\n

If you\u2019re self-employed, you\u2019d take your net business income, let\u2019s say it\u2019s $100,000, and subtract half of your self-employment tax. If your self-employment tax is $14,130, you\u2019d divide that by 2 to get $7,065 and then multiply the adjusted earnings by 20%. This would mean your SEP contribution would be $18,587. If you\u2019re an employer paying for employees, you\u2019d just contribute 25% of each eligible employee\u2019s gross compensation.<\/p>\n

Suttle says SEP IRAs get tricky as they require proportional contributions to all eligible employees. \u201cThat means if your S Corp has staff who are 21 or older, have worked for you in at least three of the last five years and earned $750 or more in 2024, you would be required to contribute the same percentage of their wages as you do for yourself,\u201d says Suttle.<\/p>\n

Key question: Do you have any employees?<\/p>\n

The biggest consideration here is the number of employees you have. \u201cIf you have employees and commence with a plan, you will need to consider matching requirements. The concept behind this is fairness to an employee population, so that owners don\u2019t do max funding for themselves and leave the employees without any deferred saving benefits,\u201d says financial adviser Bill Haydon at Wells Fargo Advisors Financial Network.\u00a0<\/p>\n

If you\u2019re the only employee, you may want to consider a solo 401(k) instead. \u201cIt often offers more flexibility and higher contribution limits. With a solo 401(k), you can contribute both as the employee (up to $23,000 if you\u2019re under 50, or $30,500 if you\u2019re over 50) and as the employer up to 25% of your compensation, giving you the opportunity to double dip and potentially contribute more than you could with a SEP,\u201d says certified financial planner Gabriel Shahin at Falcon Wealth Planning.\u00a0<\/p>\n

If you have employees, a SEP would require you to contribute the same percentage of compensation for eligible employees as you do for yourself, which could get expensive. \u201cSolo 401(k)s are only available if you have no full-time employees other than your spouse. If you\u2019re unsure why your CPA has advised against a SEP, or hasn\u2019t mentioned a solo 401(k), it might be worth getting a second opinion from a financial adviser or retirement plan specialist familiar with small business retirement options,\u201d says Shahin.<\/p>\n

What kind of pro can help?\u00a0<\/p>\n

You\u2019d likely benefit from tax planning and working with a CPA or a CFP to map out what makes the most sense given your circumstances. \u201cReview how much you\u2019re paying yourself through the S Corp payroll and depending on tax brackets, it might make sense to do a SEP IRA and Roth IRA,\u201d says Matthew Saneholtz, certified financial planner at Tobias Financial Advisors.<\/p>\n

Working with a CFP ensures you\u2019re engaging a professional who has completed extensive coursework, passed exams, performed thousands of hours of work-related experience and upholds a fiduciary duty. Similarly, CPAs must meet education requirements (often 150 semester hours of college education), pass exams and complete supervised work before applying for licensure to the state Board of Accountancy.<\/p>\n

Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.<\/strong><\/p>\n

Questions edited for brevity and clarity. By emailing your questions to The Advicer, you agree to have them published anonymously on MarketWatch; they may appear anonymously in other media and platforms.<\/p>\n","protected":false},"excerpt":{"rendered":"Question: \u201cI am a small business owner. I have a pool service in Phoenix, Arizona. I contribute to…\n","protected":false},"author":3,"featured_media":535038,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[529,64,19451,190830,216964,60,57,190843,4313,216965,216963,255,3234,190263,708,47587,216969,216966,216967,216970,216968,5660,1061,67,132,68],"class_list":{"0":"post-535037","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-analysis","9":"tag-business","10":"tag-corporate","11":"tag-corporate-industrial-news","12":"tag-financial-investment-services","13":"tag-financial-services","14":"tag-general-news","15":"tag-industrial-news","16":"tag-investing","17":"tag-investing-securities","18":"tag-mpsmartasset","19":"tag-personal-finance","20":"tag-political","21":"tag-political-general-news","22":"tag-retirement-planning","23":"tag-securities","24":"tag-selection-of-top-stories","25":"tag-selection-of-top-stories-trends-analysis","26":"tag-suggested-reading-industry-news","27":"tag-suggested-reading-investing","28":"tag-suggested-reading-investing-securities","29":"tag-synd","30":"tag-trends","31":"tag-united-states","32":"tag-unitedstates","33":"tag-us"},"share_on_mastodon":{"url":"","error":"Validation failed: Text character limit of 500 exceeded"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/535037","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=535037"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/535037\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/535038"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=535037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=535037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=535037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}