SEP IRAs

CDs and IRAs

SEP IRAs

A SEP IRA (Simplified Employee Pension) provides business owners a simple method to contribute toward their employees’ retirement, as well as their own retirement savings.

Features

Earnings grow on a tax-deferred basis.

Self-employed individuals can maintain an SEP even if they participate in a retirement plan provided by a second employer.

Contributions by employers generally qualify as a business expense resulting in tax savings but are limited by annual income and compensation.

A SEP IRA follows the same investment, distribution, and rollover rules as traditional IRAs.

Maximum Contribution

Employees cannot make contributions to the SEP plan.

2024 Maximum Contribution for Employers: $69,000 or 25% of the employee’s compensation for 2024, whichever is less.

Contributions are made to an Individual Retirement Account or Annuity set up for each plan participant.

Contributions must be made by an employer’s tax-filing date, including extensions.

Eligibility

Distribution is taxable and is required by April 1 of the year after a participant becomes age 73.

401(k) Contribution

Learn more about the impact of increasing your 401(k) contribution.

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*There is a 50% excess accumulation tax on any required distribution not taken by the due date.

The above information is provided for educational purposes and is not intended as tax advice. Please consult a tax professional.