Simplified Employee Pension (SEP) IRA

A Simplified Employee Pension Plan, or SEP IRA, is a type of employer-sponsored retirement savings plan. It is a great way to increase the amount you and your employees save for retirement.

The SEP IRA is a great option if you are a self-employed individual or small business owner. 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 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 Contributions to a SEP IRA are tax deductible, and earnings within the account are tax deferred until withdrawn, just like a 401(k) plan.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 the investments’ income in these accounts grows without having to be included in your annual taxable income. Only when the funds are withdrawn from the account as a distribution will there be a potential tax liability.

Key Features

• Tax-Deferred
  Funds are tax-deferred while in the account, which means that you do not have to pay taxes until the funds or assets are removed from the account.

• Tax Deductions
  Contributions to your SEP IRA may be tax deductible by your business, provided you meet certain requirements.

• Employee Retention
  Motivates employee retention by providing your team with additional benefits to assist in saving more for retirement.

• Longer Contribution Period
  Your 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 a complete breakdown of the rules and regulations concerning SEP plans. Certain restrictions apply regarding prohibited transactions.

Frequently Asked Questions

about SEP IRAs