SEP IRAs — Employee retirement plans—simplified


SEP IRAs — Employee retirement plans—simplified

If you’re a business owner looking for ways to make your employee benefits package less complicated, what could be better than a retirement benefit that’s officially labeled as “simplified”?

A Simplified Employee Pension (SEP) is a retirement plan that’s popular among self-employed individuals and small business owners. A SEP allows an employer to make retirement contributions to individual retirement arrangements (called SEP IRAs) for each employee.

Who can set up a SEP IRA?

If you’re self-employed (as a sole proprietor or as a partner), with or without employees, you can set up a SEP plan for yourself. If you run a business and have employees, a SEP must include all employees as participants.

SEP IRAs are easy to set up and don’t require a lot of paperwork.

IRA Eligibility Calculator

Do you qualify for IRA tax-advantages?

Simple, flexible and cost-effective retirement plan administration

SEPs, as you would expect from the name, are relatively easy to set up and don’t require lots of paperwork to administer. There are a number of benefits for both the employer and employee:

  • Contributions are deducted from the employer’s income and not included in the employee’s income, which reduces current income taxes.
  • SEP IRAs only allow employers to make contributions.
  • Contribution limits are higher than Traditional IRAs or Roth IRAs (up to 25 percent of each employee’s pay with a maximum annual limit of $49,000).
  • The employer has the flexibility when to decide how much to contribute and contributions are optional from one year to the next, giving you the ability to adapt to cash flow fluctuations.
  • An employee can continue to make contributions to a Traditional or Roth IRA. (Subject to IRS income eligibility guidelines.)

Establishing your SEP

A SEP may be just the simplified solution you need for your retirement benefits. We can help you set up a SEP for your business and serve as the IRA custodian holding assets for each employee.