Each account has different limitations:
Roth and Traditional IRAs:
If you are younger than 50 years old, Roth and Traditional IRAs have a maximum allowed contribution of $5,500 per year (in year 2016).
If you are older than 50 years old, Roth and Traditional IRAs typically allow a catch-up contribution to provide for a maximum allowed contribution of $6,500 per year (in year 2016).
If you have multiple Roth and Traditional IRAs the total annual contribution to all accounts must never exceed the maximum annual contribution limit set by the IRS for the calendar year. If you over contribute to either account penalties may apply until the account is corrected.
Depending on your filing status or MAGI (modified adjusted gross income) you may qualify for different amounts of contribution allowed per account type (Roth or Traditional IRAs). For example, you may not be allowed to make any Roth IRA contributions, but as an alternative you may be allowed to make Traditional IRA contributions to make up your total contribution limit.
SEP IRAs permit employers to make a maximum contribution of up to the lesser of (i)25% of compensation or (ii) $53,000 (for 2015 and 2016 and subject to annual cost-of-living adjustments for later years).
You may have multiple SEP IRAs with other companies, but if you are employed by multiple companies and/or have other types of retirement accounts the maximum contribution you may be eligible to make may be lowered. In order to calculate your exact maximum contribution, please consult your tax professional.
Honest Dollar is an investment advisory firm that can facilitate the creation of a retirement account. While we are familiar with the requirements for establishing accounts for tax planning purposes, we do not offer tax planning advice. If you don’t already have one, we strongly encourage you to contact a tax professional that can provide you with a comprehensive assessment of your tax situation.