SEP IRA

A simplified employee pension (SEP) plan is a retirement plan established by an employer.  Each year, the employer can contribute a certain percentage of each eligible employee’s compensation directly to the employee’s traditional IRA.

The deadline for establishing or contributing to a SEP plan is your business’s income tax-filing deadline, including extensions.

What advantages does a SEP offer to the business owner?

•        Minimal amount of paperwork and bookkeeping necessary to start and maintain the plan. 

•        Flexibility it affords with respect to contributions.  The employer can contribute any amount is wishes, up to a maximum set by law or it can choose not to make any contribution at all.

•        The employer’s fiduciary duty is reduced because participants in a SEP choose their own investments when they establish IRAs.

•        A SEP may be established after the end of the employer’s taxable year.