What is a SEP IRA?

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 retirement plan can help you contribute to your retirement savings while reducing your taxable income.

The advantages of a SEP IRA

SEP IRAs have a number of advantages over other retirement plans, including:

Who can contribute to a SEP IRA

Anyone who:

How contributions are made to a SEP IRA

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 $52,000 per participant in tax year 2014, the highest limit allowed by law).

In addition:

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