But it was deleted before I could read it. please resend.

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@treasur2 wrote:

My client maxes out his combined (50+ years) DC limit every year (2024 $76,500) with a more modest income than $345,000. The is the limit stated on the worksheet and otherwise.

He does this by ..

1. Maxing his 2024 "elective deferral" of $23,000 and $7,500. To equal $30,500

2. Then subtract that from $76,500. Leaving $46,000

3. Then dividing by 2 and getting $23,000

4. Contributing both $23,000 as the employer to the 401(k) and the SEP.

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Is this all under one business, or is it multiple businesses?  If it is one business, I think you are misunderstanding how it works, and are over contributing.  Even if it is two Schedule C businesses, my first inclination is that won't increase the limits (although I would need to research it).

$69,000 (plus $7,500 catch up) is the maximum contribution, but that is only *IF* the taxpayer makes enough that the employer contribution can be at least $46,000 ($69,000 -.$23,000).

The employer contribution is 20% of Net Earnings (line 3 of the worksheet).  If the Net Earnings are less so that the 20% employer contribution is less than $46,000, the taxpayer can't contribute $76,500.

If this is one business, splitting between a SEP and a 401k doesn't increase the allowable amount employer amount.  Unless for some reason you want it in two separate accounts, there is no reason to also do a SEP if there is already a 401k.  Actually, there may even be a conflict because the standard IRS SEP agreement form can't be used if you also have a 401k.

If this is from two separate businesses, well, you could be right but you also could still be over contributing, but I would need to look at the actual numbers to figure it out.  And as I said before, if it is two Schedule C businesses, I still think the same rules apply and are limited as if it was one business (but I would need to double-check that).

I also think you are over contributing. From IRS, Link: https://www.irs.gov/retirement-plans/how-much-can-i-contribute-to-my-self-employed-sep-plan-if-i-par...

Employee contributions

Your total annual employee contributions to all the plans can't exceed your personal limit of $23,000 in 2024 ($22,500 in 2023, $20,500 in 2022, $19,500 in 2020-2021; $19,000 in 2019), plus an additional $7,500 in 2024 and 2023 ($6,500 in 2020-2022; $6,000 in 2015 - 2019) if you're age 50 or older. However, because the SIMPLE IRA plan limits your contributions to $16,000 in 2024 ($15,500 in 2023; $14,000 in 2022; $13,500 in 2020-2021), plus an additional $3,000 catch-up contribution.

If you participate in more than one retirement plan that allows you to make salary deferrals (such as a 401(k) or a 403(b) plan), your total annual employee contributions to all the plans can't exceed your personal limit of $23,000 in 2024 ($22,500 in 2023; $20,500 in 2022; $19,500 in 2020 and 2021 and $19,000 in 2019, plus an additional $7,500 in 2024 and 2023 ($6,500 in 2020, 2021 and 2022  and $6,000 in 2015 - 2019) if you're age 50 or older. However, because the SIMPLE IRA plan limits your contributions to $16,000 in 2024 ($15,500 in 2023; $14,000 in 2022 and $13,500 in 2020-2021), plus an additional $3,000 catch-up contribution, this is the maximum amount you can contribute to your SIMPLE IRA plan.

SEP is not a SIMPLE. The employer contribution limit for 2025 is the lesser of 25% of an employee's compensation or $70,000. SEP IRAs do not have a catch-up contribution provision.