SEP IRA: Simplified Employee Pension Plan
Simplified Employee Pension Plans (SEP IRAs) help self-employed individuals and small-business owners get access to a tax-deferred benefit when saving for retirement.
- Tax-deferred growth potential
- Tax-deductible contributions
- Must be sole proprietor, a business owner, in a partnership, or earn self-employment income by providing a service
- Must be made by the employer
- Can vary each year between 0% and 25% of compensation (maximum $51,000 for 2013 and $52,000 for 2014), and each eligible employee must receive the same percentage
April 15 tax filing deadline for most self-employed individuals and small-business owners (including any extensions)
- Employee notification of employer's contribution
- Employers must fill out and retain Form 5305 SEP in their records.
- No plan tax filings with IRS
- Each eligible employee must open their own an individual SEP IRA account. Generally, employees must be allowed to participate if they are over age 21, earn at least $550 annually, and have worked for the same employer in at least three of the past five years
- Minimum required distributions starting at age 70½ 10% early withdrawal penalty if under age 59½, subject to certain exceptions
- A wide range of ‘no load’ mutual funds, stocks, bonds, ETFs, and FDIC-insured CDs
Support and guidance
- One-on-one guidance along with research and tools to help you create a long-term plan and make investment selections for the plan
Note: Information deemed accurate but not guaranteed. All investing is subject to risk, including the possible loss of the money you invest.