A Simplified Employee Pension Plan, otherwise known as a SEP IRA, is a retirement plan specifically designed for anyone with self-employment income (for example, self-employed individuals and small business owners). A SEP IRA can help you contribute to your retirement savings while reducing your taxable income.
SEP IRAs have a number of advantages over other retirement plans, including:
All contributions made to a SEP IRA are employer contributions. An employee cannot defer a portion of his or her salary and contribute it to a SEP IRA. Employers may contribute up to 25% of an employee's compensation (up to $50,000 per participant in tax year 2012 and $51,000 in 2013, the highest limit allowed by law).
* SEP IRAs for sole proprietorships can only be established though the Investment Solutions IRA. SEP IRAs for partnerships or business owners (S Corps) can be established through the Brokerage Services IRA.
The tax information contained herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed herein. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
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