SEP IRA

A SEP IRA, or Simplified Employee Pension Individual Retirement Account, is a retirement savings option designed for self-employed individuals and small business owners. It allows employers to make tax-deductible contributions on behalf of themselves and their employees. Contributions can be substantial—up to 25% of an employee’s compensation, or a set dollar limit, whichever is lower. The funds grow tax-deferred until withdrawal, typically during retirement. This plan is easier to set up and maintain than traditional retirement plans, making it attractive for businesses with few employees. It promotes saving for retirement while benefiting from tax advantages.