» 401k Retirement Plan Guides » SEP IRA Plan


If you are a small business owner or self-employed you can still make contributions for your retirement years. This can be done by using a Simplified Employee Pension Plan (also known as SEP IRA). Separate SEP IRA accounts are opened for each employee. You should also establish a separate SEP IRA account for yourself. After opening the corresponding employee accounts, contributions to each of them are made by the employer.

In order to open a SEP IRA account you should meet the following requirements:

  1. You should be part of one of the following categories:

    • Sole proprietor in a partnership
    • Business owner (either incorporated or unincorporated)
  2. Have a self-employed income, which comes from the offering of a service. The latter can be of a full or part-time employment, regardless of the fact that you already have a full-time job retirement plan.

SEP IRAs provide many tax advantages to its users. One of them is the fact that contributions are tax-deductible. Limits are set on them. Additionally, SEP IRAs provide a tax-deferred growth of the assets you have invested in your account.

SEP IRAs have no requirements regarding annual contributions. Additionally, contribution percentage can vary each year. What is more, employers are obliged to make contributions to their employees' accounts, which cannot differ in their amount from one employee to another.

SEP IRAs doesn't require you to fill any complicated forms and you don't have to file annual reports to the SEC.

In order to open a SEP IRA account you should follow some deadlines. You can establish an account of a SEP IRA type until the deadline of your tax filing. If you are self-employed or an owner of a small business, the deadline you should meet is usually April 15 each year.

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