SEP IRA
SEP IRA
For self-employed individuals or small-business owners, primarily with only a few employees.
PLAN DETAILS
SEP IRA
Simplified Employee Pension Plans (SEP IRAs) help self-employed individuals and small-business owners get access to a tax-deferred benefit when saving for retirement.
- Ideal for small business owners who are comfortable making all of the contributions. The SEP IRA is funded only by employer contributions, not by employee salary deferral.
- Self-employed individuals who are interested in contributing more to their retirement savings than a traditional or Roth IRA allows but do not want the administrative responsibilities of a 401(k).
- An individual who participates in their employer’s retirement plan can open a SEP IRA if they have self-employed income.
Key facts and details
Eligibility
A Simplified Employee Pension Plan (SEP-IRA) is specifically designed for self-employed individuals and small business owners who want to save for retirement without getting involved in complex plan administration. If you are self-employed or have few employees, and if you want flexibility in the amount you contribute annually—particularly if you want to make high contributions—a SEP-IRA might be right for you.
Tax Benefits
Employer contributions are tax-deductible. Earnings grow tax-deferred and are not taxed until they are withdrawn.
Who contributes
Funded by employer contributions.
Contribution amounts
Must be made by the employer and can vary each year between 0% and 25% of compensation. Minumum is set by the IRS. See SEP Plans for more information. Each eligible employee must receive the same percentage.
Withdrawals
0% early withdrawal penalty (25% for first 2 years of plan participation) if under age 59½, subject to certain exceptions. Required minimum distributions starting at age 72.
Fees
There is no cost to opening or closing an account. There is no annual maintenance fee. SEP IRA’s are professionally managed. Global Advisers charges an annual management fee.
Administrative responsibilities
Employee notification of employer’s contribution. Employers must fill out and retain Form 5305 SEP (PDF) in their records. No plan tax filings with IRS. Each employee must open an individual SEP IRA account.
Deadlines
SEP IRAs must be established and funded by your tax filing deadline plus applicable extensions.
How to make contributions
Deposit checks by mail or through mobile deposit, contribute online through Bill Pay or via EFT or call us. Always be sure to include your account number with your contributions.
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