Simplified Employee Pension (SEP) IRA
A Simplified Employee Pension Plan, or SEP IRA, is a type of employer-sponsored retirement savings plan that allows employers and their employees to increase the amount they can save for retirement.
The SEP IRA may be a great option if you are a self-employed individual or small business owner because it allows you to take a potential tax deduction equivalent to the contributions made into the SEP IRA each year. This tax deduction is subject to government guidelines.
The rules governing a SEP plan are not as complicated as a 401(k) plan and the plan types have a few similar benefits. Contributions to a SEP IRA are tax deductible, and earnings within the account are tax-deferred until withdrawn, just like a 401(k) plan. This means that any earnings in these accounts grow without having to be included in your annual taxable income. Only when the funds are withdrawn from the account as a distribution will taxes potentially apply.
Funds are tax-deferred while in the account, which means that you do not have to pay taxes until the funds or assets are withdrawn from the account.
- Tax deductions
Contributions to a SEP IRA may be tax deductible by a business, provided the employer meets certain requirements.
- Employee retention
A SEP plan may encourage employee retention by providing the team with an additional benefit to assist them in saving more for retirement.
- Longer contribution period
Employees can continue to receive SEP contributions past age 72, as long as they meet the requirements of the employer’s SEP plan agreement.
NOTE: Please visit www.irs.gov for complete rules and regulations regarding SEP plans. Certain restrictions apply regarding prohibited transactions.
It’s easy to get started investing in a SEP plan. Open an account in just a few minutes on our online portal.
Frequently Asked Questions
about SEP IRAs
What are the fees for opening a SEP IRA?
Most custodians of traditional assets collect fees and/or commissions based off of the amount of trades or recommendations of investment choices. Provident Trust Group offers a flat-rate annual fee.
View our fee schedule for full, transparent breakdown of our fees.
What is the maximum allowable contribution?
Our COLA limits document provides a comprehensive overview of how much you can contribute to your SEP IRA.