SEP IRA (Simplified Employee Pension IRA)

Flexible, Powerful Retirement Savings for Small Business Owners and the Self-Employed

A SEP IRA is an excellent retirement savings solution for self-employed individuals, freelancers, independent contractors, and small business owners. It provides a simple, cost-effective way to contribute toward your retirement — while also offering significant tax advantages.

With a SEP IRA, you can build wealth faster than with a traditional IRA thanks to higher contribution limits and greater flexibility in how much you contribute each year.

Key Features of a SEP IRA:

✅ Employer-Funded Only

  • Contributions are made solely by the employer (even if you’re self-employed, you are considered both employer and employee).
  • Employees cannot make their own contributions to the SEP IRA.

✅ High Contribution Limits

  • You can contribute up to 25% of each employee’s compensation, or a maximum of $69,000 for 2024 (limits are adjusted annually for inflation).
  • This is significantly higher than the limits for Traditional or Roth IRAs, allowing you to supercharge your retirement savings.

✅ Flexible Annual Contributions

  • You have the flexibility to decide how much to contribute each year—or whether to contribute at all.
  • This makes SEP IRAs ideal for businesses with variable income or cash flow, allowing you to adjust contributions based on your profitability each year.

✅ Easy to Set Up and Maintain

  • SEP IRAs have minimal paperwork and low administrative costs compared to traditional employer-sponsored plans like 401(k)s.
  • No complex annual IRS filings are required for most businesses, making it a hassle-free option.

✅ Immediate Vesting for Employees

  • Contributions made to employee accounts are immediately 100% vested. Employees own the funds right away, adding to the attractiveness of the plan.

✅ Tax Advantages

  • Contributions are tax-deductible for the business, reducing taxable income.
  • Investments grow tax-deferred until withdrawal, typically in retirement when you may be in a lower tax bracket.

Why Choose a SEP IRA?

  • Self-employed? Maximize your retirement savings while benefiting from valuable tax deductions.
  • Own a small business? Provide a retirement benefit that’s easy to administer and highly valuable to your employees without the heavy administrative burden of other plans.
  • Want flexibility? SEP IRAs allow you to contribute heavily in good years and scale back when necessary, without penalties.

Important SEP IRA Considerations:

  • If you contribute for yourself, you must also contribute an equal percentage for all eligible employees.
  • Withdrawals taken before age 59½ may be subject to taxes and penalties.
  • Contribution limits apply based on employee compensation and IRS guidelines.

📞 Ready to Explore SEP IRA Options?

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