Can You Still Open a SEP for 2025? Practice Owners on Extension Have Until Oct. 15
Your preparer filed an extension back in April. Your 2025 return is due Thursday. If your practice is a sole proprietorship or a single-member LLC, one move this week can still take thousands off last year's tax bill.
Short answer: Yes. If your 2025 return is on extension and your practice reports on Schedule C, you can set up and fund a SEP IRA until Oct. 15, 2026, and deduct it on your 2025 return. You can put in up to 20% of your net self-employment earnings, capped at $70,000.
Why Thursday matters
Oct. 15, 2026 is the extended filing deadline for 2025 individual returns, and as many as 20 million taxpayers extend each year. For a SEP, the IRS lets you set up the plan and make the contribution as late as the due date of your return, including extensions. Once that date passes, the 2025 window is gone.
The math for a $180,000 practice
Dr. Morgan owns her chiropractic practice through a single-member LLC. Her 2025 Schedule C shows $180,000 of net profit, she has no staff who qualify for the plan, and her top federal bracket is 24%.
| Step | Amount |
|---|---|
| Net profit on Schedule C | $180,000 |
| Minus half of self-employment tax | $12,717 |
| Net self-employment earnings | $167,283 |
| Maximum SEP contribution (20%) | $33,456 |
| QBI deduction lost (20% of the contribution) | $6,691 |
| Net drop in taxable income | $26,765 |
| Federal income tax saved at 24% | $6,424 |
Two details most owners miss. The SEP lowers income tax but not self-employment tax. It also shrinks your Section 199A qualified business income deduction, because retirement contributions count against business income in that calculation. Skip that step and you would expect $8,030 in savings instead of $6,424.
The $33,456 still belongs to Dr. Morgan. It moved from the practice account to her retirement account, and her 2025 federal tax went down by $6,424, plus whatever her state saves her.
Three cases where this does not work
- Your practice is an S corporation or a partnership. The SEP deadline follows the business return, and those extended returns were due Sept. 15, 2026. The 2025 window is closed. If you are weighing the S corp question for 2026, start with Should Your Practice Be an S Corp?
- You have eligible staff. A SEP covers every employee who is at least 21, worked for you in at least three of the last five years, and earned at least $750 from you in 2025. Each one must get the same contribution rate you use. At the full 25% rate, which works out to the 20% figure above for an owner, a chiropractic assistant earning $40,000 would get $10,000. That can still pay off, but run the numbers first.
- You filed in April without an extension. Your SEP deadline was April 15, 2026.
What to do before Thursday
- Ask your preparer today whether your 2025 return is still on extension and not yet filed.
- Get your 2025 net profit and have them confirm your maximum. Tell them about any staff who meet the eligibility test.
- Open a SEP IRA with your brokerage and sign Form 5305-SEP. Keep it in your records; it is not filed with the IRS.
- Fund it by Oct. 15 and tell the custodian it is a 2025 contribution. Transfers can take a business day or two, so start today, and use cash you will not need for your Jan. 15 estimated tax payment.
- Make sure the deduction lands on Schedule 1 of your 2025 Form 1040 before the return goes in.
The bigger move is 2026
A SEP is a quick fix for last year. For 2026, practice owners usually have stronger options: a 401(k) with profit sharing, or a cash balance plan for higher earners, built around your staff and your cash flow. Those take planning before Dec. 31.
Plan 2026 before the year closes. Book a 15-minute Year-End Fit Call by Dec. 15 and we will map your 2026 moves alongside your CPA, not instead of them. A California chiropractic group saved $108,000 in tax with a Quartermaster plan. Results vary. Book your Year-End Fit Call
Frequently asked questions
Can I open a SEP IRA for 2025 in October 2026?
Yes, if your 2025 return is on extension and your practice reports on Schedule C. Set it up and fund it by Oct. 15, 2026, before the return is filed.
How much can a self-employed practice owner put in a SEP for 2025?
Up to 20% of net self-employment earnings after the deduction for half of self-employment tax, capped at $70,000. Compensation above $350,000 does not count.
Does a SEP lower self-employment tax?
No. It lowers income tax only, and it reduces your QBI deduction, so the real savings run below your bracket rate.
My practice is an S corp. Can I still do this for 2025?
No. The S corp's extended deadline was Sept. 15, 2026. Your next window is 2026 planning before Dec. 31.
Sources
- IRS: Simplified Employee Pension Plan (SEP): set up and fund by the return due date, including extensions.
- IRS Publication 560: 2025 limit of $70,000, $350,000 compensation cap, employee eligibility, the 20% owner rate.
- SSA: Contribution and benefit base: 2025 Social Security wage base of $176,100.
- 26 CFR 1.199A-3(b)(1)(vi): retirement plan deductions are attributable to the business for QBI.
- CPA Practice Advisor, Oct. 6, 2026: the Oct. 15 deadline and up to 20 million extension filers.
This article is general information, not tax or legal advice. Your numbers depend on your facts, so confirm with your tax professional before you act.
