Publication 560 - Retirement Plans for Small Business (SEP, SIMPLE and Qualified Plans) - Table and Worksheets for the Self-Employed

Publication 560

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Table and Worksheets for the Self-employed

As discussed in chapters 2 and 4, if you are self-employed, you must use the following rate table or rate worksheet and deduction worksheet to figure your deduction for contributions you made for yourself to a SEP-IRA or qualified plan.

First, use either the rate table or rate worksheet to find your reduced contribution rate. Then complete the deduction worksheet to figure your deduction for contributions.

The table and the worksheets in chapter 5 apply only to self-employed individuals who have only one defined contribution plan, such as a profit-sharing plan. A SEP plan is treated as a profit-sharing plan. However, do not use this worksheet for SARSEPs.

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If your plan's contribution rate is a whole percentage (for example, 12% rather than 121/2%), you can use the table on the next page to find your reduced contribution rate. Otherwise, use the rate worksheet provided below.

First, find your plan contribution rate (the contribution rate stated in your plan) in Column A of the table. Then read across to the rate under Column B. Enter the rate from Column B in step 4 of the Deduction Worksheet for Self-Employed on this page.

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Example.(p22)

You are a sole proprietor with no employees. If your plan's contribution rate is 10% of a participant's compensation, your rate is 0.090909. Enter this rate in step 4 of the Deduction Worksheet for Self-Employed on this page.

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Deduction Worksheet for Self-Employed

Step 1
	Enter your net profit from line 31, Schedule C (Form 1040); line 3, Schedule C-EZ (Form 1040); line 36, Schedule F (Form 1040); or box 14, code A, Schedule K-1 (Form 1065)
	*Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b.
	**General partners should reduce this amount by the same additional expenses subtracted from box 14, code A to determine the amount on line 1 or 2 of Schedule SE
Step 2
	Enter your deduction for self-employment tax from Form 1040, line 27 or your recalculated deduction for self-employment tax*
	*If you did not take the self employed health insurance deduction (SEHID) on Form 1040, line 29, enter the amount from Form 1040, line 27. If you did take the SEHID, you must recalculate your deduction for self-employment tax using Schedule SE as a worksheet. When completing line 3, Short or Long Schedule SE, treat the amount from Form 1040, line 29 as zero.
Step 3
	Net earnings from self-employment. Subtract step 2 from step 1
Step 4
	Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed
Step 5
	Multiply step 3 by step 4
Step 6
	Multiply $245,000 by your plan contribution rate (not the reduced rate)
Step 7
	Enter the smaller of step 5 or step 6
Step 8
	Contribution dollar limit		$49,000
	•	If you made any elective deferrals to your self-employed plan, go to step 9.
	•	Otherwise, skip steps 9 through 20 and enter the smaller of step 7 or step 8 on step 21.
Step 9
	Enter your allowable elective deferrals (including designated Roth contributions) made to your self-employed plan during 2010. Do not enter more than $16,500
Step 10
	Subtract step 9 from step 8
Step 11
	Subtract step 9 from step 3
Step 12
	Enter one-half of step 11
Step 13
	Enter the smallest of step 7, 10, or 12
Step 14
	Subtract step 13 from step 3
Step 15
	Enter the smaller of step 9 or step 14
	•	If you made catch-up contributions, go to step 16.
	•	Otherwise, skip steps 16 through 18 and go to step 19.
Step 16
	Subtract step 15 from step 14
Step 17
	Enter your catch-up contributions (including designated Roth contributions), if any. Do not enter more than $5,500
Step 18
	Enter the smaller of step 16 or step 17
Step 19
	Add steps 13, 15, and 18.
Step 20
	Enter the amount of designated Roth contributions included on lines 9 and 17.
Step 21
	Subtract step 20 from step 19. This is your maximum deductible contribution.

Next: Enter your actual contribution, not to exceed your maximum deductible contribution, on Form 1040, line 28.

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If your plan's contribution rate is not a whole percentage (for example, 101/2%), you cannot use the Rate Table for Self-Employed. Use the following worksheet instead.

Rate Worksheet for Self-Employed

1)	Plan contribution rate as a decimal (for example, 101/2% = 0.105)
2)	Rate in line 1 plus 1 (for example, 0.105 + 1 = 1.105)
3)	Self-employed rate as a decimal rounded to at least 3 decimal places (line 1 ÷ line 2) (for example, 0.105 ÷ 1.105 = 0.095)

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Now that you have your self-employed rate from either the rate table or rate worksheet, you can figure your maximum deduction for contributions for yourself by completing the Deduction Worksheet for Self-Employed.

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If you reside in a community property state and you are married and filing a separate return, disregard community property laws for step 1 of the Deduction Worksheet for Self-Employed. Enter on step 1 the total net profit you actually earned.

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Deduction Worksheet for Self-Employed

Step 1
	Enter your net profit from line 31, Schedule C (Form 1040); line 3, Schedule C-EZ (Form 1040); line 36, Schedule F (Form 1040); or box 14, code A, Schedule K-1 (Form 1065)		$200,000
	*Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b.
	**General partners should reduce this amount by the same additional expenses subtracted from box 14, code A to determine the amount on line 1 or 2 of Schedule SE
Step 2
	Enter your deduction for self-employment tax from Form 1040, line 27 or your recalculated deduction for self-employment tax*		9,300
	*If you did not take the self employed health insurance deduction (SEHID) on Form 1040, line 29, enter the amount from Form 1040, line 27. If you did take the SEHID, you must recalculate your deduction for self-employment tax using Schedule SE as a worksheet. When completing line 3, Short or Long Schedule SE, treat the amount from Form 1040, line 29 as zero.
Step 3
	Net earnings from self-employment. Subtract step 2 from step 1		190,700
Step 4
	Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed		0.078
Step 5
	Multiply step 3 by step 4		14,875
Step 6
	Multiply $245,000 by your plan contribution rate (not the reduced rate)		20,825
Step 7
	Enter the smaller of step 5 or step 6		14,875
Step 8
	Contribution dollar limit		$49,000
	•	If you made any elective deferrals to your self-employed plan, go to step 9.
	•	Otherwise, skip steps 9 through 20 and enter the smaller of step 7 or step 8 on step 21.
Step 9
	Enter your allowable elective deferrals (including designated Roth contributions) made to your self-employed plan during 2010. Do not enter more than $16,500		N/A
Step 10
	Subtract step 9 from step 8
Step 11
	Subtract step 9 from step 3
Step 12
	Enter one-half of step 11
Step 13
	Enter the smallest of step 7, 10, or 12
Step 14
	Subtract step 13 from step 3
Step 15
	Enter the smaller of step 9 or step 14
	•	If you made catch-up contributions, go to step 16.
	•	Otherwise, skip steps 16 through 18 and go to step 19.
Step 16
	Subtract step 15 from step 14
Step 17
	Enter your catch-up contributions (including designated Roth contributions), if any. Do not enter more than $5,500
Step 18
	Enter the smaller of step 16 or step 17
Step 19
	Add steps 13, 15, and 18.
Step 20
	Enter the amount of designated Roth contributions included on lines 9 and 17
Step 21
	Subtract step 20 from step 19. This is your maximum deductible contribution		$14,875

	Next: Enter your actual contribution, not to exceed your maximum deductible contribution, on Form 1040, line 28.

Rate Table for Self-Employed

Column A If the plan contri- bution rate is: (shown as %)	Column B Your rate is: (shown as decimal)
1	.009901
2	.019608
3	.029126
4	.038462
5	.047619
6	.056604
7	.065421
8	.074074
9	.082569
10	.090909
11	.099099
12	.107143
13	.115044
14	.122807
15	.130435
16	.137931
17	.145299
18	.152542
19	.159664
20	.166667
21	.173554
22	.180328
23	.186992
24	.193548
25*	.200000*
*The deduction for annual employer contributions (other than elective deferrals) to a SEP plan, a profit-sharing plan, or a money purchase plan cannot be more than 20% of your net earnings (figured without deducting contributions for yourself) from the business that has the plan.

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Example.(p23)

You are a sole proprietor with no employees. The terms of your plan provide that you contribute 81/2% (.085) of your compensation to your plan. Your net profit from line 31, Schedule C (Form 1040) is $200,000. You have no elective deferrals or catch-up contributions. Your self-employment tax deduction on line 27 of Form 1040 is $9,300. See the filled-in portions of both Schedule SE (Form 1040), Self-Employment Income, and Form 1040, later.

You figure your self-employed rate and maximum deduction for employer contributions you made for yourself as follows.

See the filled-in Deduction Worksheet for Self-Employed on this page.

Rate Worksheet for Self-Employed

1)	Plan contribution rate as a decimal (for example, 101/2% = 0.105)	0.085
2)	Rate in line 1 plus 1 (for example, 0.105 + 1 = 1.105)	1.085
3)	Self-employed rate as a decimal rounded to at least 3 decimal places (line 1 ÷ line 2) (for example, 0.105 ÷ 1.105 = 0.095)	0.078