Sep Contribution Limits

I'm in a LLC .. I have a base salary + quarterly dispursement. Can I take 25% of these two as a contribution? or just the portion of salary? Thank you

In 2005, employers may contribute a maximum of 25% of the first tranche of 210,000 people, the allowable earnings of an employee, or $ 42,000, whichever is less. Do not exceed the limits, a non-deductible penalty tax of 6% of the amount contributed will be incurred each year an excess contribution remains in a SEP-IRA.

In the case of independent workers, the assessment is based on net income of the company (and not gross income). Calculation of maximum allowable forces you to calculate the self-employment tax.

This seems to be the formula, where "CR" is the contribution rate, like, 15 for a 15 per cent:

CR * ((Schedule C Profit or LLC income SE, where appropriate - (0.5 * Schedule SE tax)) / (1 + CR))

Employees are able to exclude from current income the entire contribution in September, however, money has contributed to a SEP-IRA belongs to the employee immediately and forever. If the employee leaves the company, all retirement contributions go with the employee (the so-called portability).