As of 2015, the contribution limits for an SEP IRA are the lesser of $53,000 or 25 percent of the compensation, according to the Internal Revenue Service. The default amount is subject to yearly adjustments for the cost of living for subsequent years.
These limits are in place for contributions to all of the defined contribution plans for employees, including SEPs. As of 2015, compensation as high as $265,000 of each employee's salary is eligible for consideration. Those who are self-employed use a separate formula to make contributions for themselves, following IRS Publication 560. Contributions must be in the form of cash rather than property, notes the IRS.
Most SEP IRAs mandate that employers set allocations in proportion to the salaries of their employees, which means that every employee's contribution has to represent the same percentage of their salaries. People whose employers make SEP IRA contributions for them are also allowed to contribute to their own Roth or traditional IRAs, up to the normal maximums established. Individuals can also contribute to their own SEP IRAs, but those contributions do apply to the limits that individuals face on contributions to all of the IRAs that they own, as stated by the IRS.