SEP IRA

A SEP IRA is a plan that works for any size of business. Even self-employed people can establish a SEP. SEP plans can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and for their employees. A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for the employer to contribute up to 25 percent of each employee’s pay into the plan.

When operating a SEP, the employer is not required to make contributions to the plan, but if they do they must contribute equally for all eligible employees.  All contributions to a SEP are 100% vested and are tax-deferred. This means that the employee can move or invest the funds in their SEP however they wish, and that tax is deferred until the employee takes the assets out of the plan through a distribution.