I am starting a limited liability company (LLC). I will be the sole member. Can I open an SEP IRA? How much tax-deferred money would I be able to contribute each year?
In a word, yes. A limited liability company (LLC) is eligible to establish a simplified employee pension (SEP). Keep in mind that plan contributions (including SEPs) are usually based on W-2 wages if the business is a corporation. This means that you may need to pay yourself W-2 wages in order to be eligible to receive an SEP contribution from the business. Check with your tax professional to be sure.
Contributions may be as much as 25% of your compensation, and they may not exceed $53,000 (for 2016). For unincorporated businesses such as sole proprietorships, partnerships and limited liability partnerships (LLPs), plan contributions may be up to 20% of the business owner's modified net profit. Should you decide to hire employees, they must also be covered under the plan if they meet the eligibility requirements.
Also see IRS Publication 560, available at http://www.irs.gov/pub/irs-pdf/p560.pdf.
This question was answered by Denise Appleby
Denise Appleby's answer to your question is excellent. The only clarifying question I'd ask of you is - do you plan to remain a solopreneur or do you see yourself hiring additional employees some day?
If you envision hiring additional employees, then you also may want to consider a SIMPLE IRA. Contribution limits are lower ($12,500 for 2016), but this plan is also easier to maintain and would likely be easier for you to fund as an employer if you end up having multiple employees working for you.
Denise wrote a great article on SIMPLE IRA's which you can check out here for more detail: http://www.investopedia.com/university/retirementplans/simpleira/
Good luck with the start of your LLC!
With Kind Regards,