3652. Can an employer deduct contributions made to a simplified employee pension?Nuco Employeercline202015-06-05T17:47:00Z2015-06-05T17:47:00Z12881647Hewlett-Packard133193214Site Map/Individual Retirement Plans/Simplified Employee Pension (SEP)SEP2005-01-25T00:00:00ZTaxFactsDefaultArticle114930240-00-tf1.xml241.00;#1794;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 1What is a simplified employee pension?131900.000000000TaxFactsDefaultArticle2010-01-19T08:12:31ZSBMEDIA\moss-admin0f08e536-ecc3-4201-b7c3-d3285df31d4d|1fb82894-7172-48f5-970a-5c12491bb821|10f2a9aa-c0ac-4d4e-b9e3-90aeb53209c73652. Can an employer deduct contributions made to a simplified employee pension?Employer contributions for a calendar year are deductible, under IRC Section 404, for the tax year in which the calendar year ends. An employer may elect to use its taxable year instead of the calendar year for purposes of determining contributions to a SEP..IRC Sec. 404(h)(1)(A). Employer contributions made on account of a calendar year or an employer’s taxable year may be made as late as the due date (plus extensions) of the employer’s tax return for such year and be treated as if contributed on the last day of that year..IRC Sec. 404(h)(1)(B). The due date for C corporations is March 15th following the close of such year and for self-employed individuals is April 15th following the close of such year..IRC Secs. 6012(a), 6072.The maximum employer deduction amount is 25 percent of compensation for the calendar year (or, if applicable, the taxable year)..IRC Sec. 404(h)(1)(C). “Compensation,” for this purpose, includes elective deferrals of the employee and certain other contributions made on a pre-tax basis..See IRC Sec. 404(a)(12), 404(n).Contributions in excess of the 25 percent deductible limit may be carried over and deducted in succeeding years..See IRC Sec. 404(h)(1)(C). But the employer is subject to an excise tax on nondeductible contributions (Q 3840). If the employer also contributes to a qualified profit sharing or stock bonus plan, the 25 percent deductible limit for that plan is reduced by the amount of the allowable deduction for contributions to the SEPs with respect to participants in the stock bonus or profit sharing plan..IRC Sec. 404(h)(2). If the employer also contributes to any other type of qualified plan, the SEP is treated as a separate profit sharing or stock bonus plan for purposes of applying the combination deduction limit of IRC Section 404(a)(7) (Q 3839)..IRC Sec. 404(h)(3).