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Is a
SEP IRA Right for You?
A Simplified Employee Pension Plan (SEP) IRA or SEP IRA has much higher contribution limits than a traditional IRA. It is also easy to set-up and maintain. You may open a SEP IRA if you are a business owner or earn self-employment income, even if you are covered by a retirement plan at your full-time job. A SEP IRA allows you to decide how you want to invest your money and contributions are not included in your taxable income until you withdrawal the principal.
SEP IRAs may Simplify Retirement Contributions
If you own your own business, a SEP IRA may provide you with a simplified means of making retirement contributions for yourself and your employees. SEP IRA contributions go directly into employee-owned IRAs. They also allow you to contribute the lesser of 25% of an employee’s compensation or $49,000.
Who Should Use a SEP IRA?
In general, SEP IRA plans are typically used by:
- Small business owners with 25 employees or less, or
- Individuals who are self-employed
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