Simplified Employee Pension (SEP) Plans

Consult your tax advisor to determine if a Simplified Employee Pension is right for you.

• A Simplified Employee Pension plan is an employer-funded retirement plan that allows employers or self-employed individuals the option to make contributions into their own and each eligible employee’s Traditional IRA.

• SEP plans are available to most types of businesses, including sole proprietorships, partnerships, corporations, tax-exempt entities, and state and local governments.

• Your employer may require employees to meet certain criteria to be eligible.

• You establish a SEP plan, an employer must sign a plan document. (Talk to your tax advisor for details).

• The plan agreement outlines SEP plan eligibility requirements, contribution rates, and allocation method.

• Each eligible employee is required to maintain a Traditional IRA to receive SEP plan contributions.

• SEP contributions go into your Traditional IRA. The Traditional IRA distribution rules apply, including the early distribution penalty tax and the required minimum distribution (RMD) rules. Any amounts distributed generally are taxable to you.

• SEP plan contributions are reported separately from regular Traditional IRA contributions.

• SEP plan contributions cannot be made to a Roth IRA.

Visit Retirement Central to learn more about SEP Plans or to open/manage an SEP account.