Simplified Employee Pension (SEP)

A Simplified Employee Pension (SEP) is a tax-deferred retirement plan that is easy to administer and allows employers to make fully discretionary contributions for themselves and their employees.

Account Details

Features and Benefits

• Employer contributions are deductible as a business expense and not required every year. The employer may increase, decrease, or skip annual contributions as necessary.
• An easy to set up and maintain retirement plan.

Annual Contribution Limits

Employer Contributions:

• For 2023, up to 25% of the participant’s compensation or $66,000, whichever is less.

Employee Contributions:

• For 2023, a personal contribution limit of up to $6,500 (or $7,500 if age 50 or older) into an individual SEP, Traditional, or Roth IRA. (All contributions to the SEP-IRA Plan are made by the employer; however, employees can contribute to their personal IRA accounts.)

Eligibility

• Generally, employees who are over age 21, earn at least $600 annually, and have worked for the same employer in at least three of the past five years must be allowed to participate.