United States
"Simplified Employee Pension (SEP) IRA"

What is a SEP IRA ?

Simplified Employee Pension (SEP) plans can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees. 

How Does the SEP IRA Work ?

Employers may make tax-deductible contributions on behalf of employees to their SEP Plan. Contributions come solely from the employer & they are not required to contribute every year.

Who is Eligible for SEP IRA ?

A SEP IRA is an employer-sponsored retirement plan that can be set up by self-employed individuals, freelancers, and small-business owners.


Who Can Participate in SEP IRA ?

Employee is eligible to participate, if he is at least 21 years old and has worked for the company in 3 of the last 5 years & received at least $750 in compensation during the year.

SEP IRA Contribution Limits

You can contribute up to 25% of employee compensation, or $66,000, whichever is less for the year 2023. For SEP IRAs, there is no catch-up contribution after age 50.

SEP IRA Withdrawal Rules

SEP IRA contributions and earnings can be withdrawn at any time. SEP are intended to be withdrawn after age 59½. You can make a withdrawal before that, but you’ll pay a 10% penalty.

Tax Credit on SEP Plan

Business owners who start up a SEP may be eligible for a tax credit of up to $500 per year for the first three years that the SEP account is open.

How to Set Up a SEP IRA ?


You can open one at almost any bank, mutual fund company or brokerage firm. If you have employees, this financial institution will serve as trustee of the SEP IRA.