A SEP IRA is a written plan that allows an employer to make contributions toward their own retirement and their employees’ retirement without getting involved in a more complex qualified plan. Under a SEP, the employer makes contributions to a traditional individual retirement arrangement (called a SEP IRA) set up by or for each eligible employee. A SEP IRA is owned and controlled by the employee, and the employer makes contributions to the financial institution where the SEP IRA is maintained. The employee may also make annual contributions subject to the limits for traditional IRAs.
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|Limit||Up to 25% of compensation|
or $55,000 in 2018 ($56,000 in 2019), whichever is less
|Eligibility||Must be sole proprietor, a business owner, in a partnership, or earn self-employment income by providing a service|
|Contribution rules ||Must be made by the employer|
Can vary each year between 0% and 25% of compensation (maximum $55,000 for 2018 and $56,000 for 2019), and each eligible employee must receive the same percentage
|Establishment deadline ||SEP IRAs must be established and funded by your tax filing deadline plus applicable extensions.|
|Employee notification of employer's contribution|
Employers must fill out and retain Form 5305 SEP (PDF)Opens in a new window in their records.
No plan tax filings with IRS
|Each employee must open an individual SEP IRA account.|
|Withdrawals||10% early withdrawal penalty may apply for withdrawals taken prior to age 59½ if no exceptions apply. Penalty-free withdrawals for qualifying first-time home purchase and certain college expenses. Required minimum distributions starting at age 70½.|
IRA margin accounts allow trading so the account can be fully invested as well as the ability to trade multiple currencies and multiple currency products, but are subject to the following limitations:
- No cash borrowing (i.e. cannot have a debit balance or short stocks).
- IRA accounts may be opened in any base currency, but when trading in a non-base currency product, a currency trade must be executed first as you cannot borrow currencies.
- Withdrawals are permitted only in USD.*
- No stock or option cross-margining.
- No currency borrowing.
- Futures trading in an IRA margin account is subject to substantially higher margin requirements than in a non-IRA margin account. Margin rates in an IRA margin account may meet or exceed three times the overnight futures margin requirement imposed in a non-IRA margin account.
Customers are advised to consult with their adviser and tax specialist for further details on IRA rules and regulations.
Residents of Canada may not open Individual Retirement Accounts.