If you are self-employed, a SEP IRA will allow you to contribute a portion of your income to your own retirement account, and fully deduct the contribution from your income taxes. The maximum annual contribution limits are higher than most other tax-favored retirement accounts.

How it Works

A self-employed person or a small business owner can set up a retirement plan quickly, inexpensively and without a big administrative hassle through a Simplified Employee Pension IRA (also known as a SEP IRA).  The IRS publishes contribution limits each year.  The SEP IRA is the most basic of several retirement plan options for small businesses, but it still provides core benefits for both business owners and workers.

These include:

    • The money you contribute to a SEP IRA can be deducted from your business’ taxes
    • You can change your contribution each year or choose to stop contributing
    • There are no papers to file with the government

There are some drawbacks to the structure of a SEP IRA including:

      • When you choose to make contributions, you must contribute the same percentage not only to your own SEP IRA, but to the SEP IRA of every eligible employee
      • Contributions become the property of the employee immediately, so it’s not possible to create a vesting schedule as an incentive for employees to stay
      • Only employer contributions are permitted under the plan, individual employees cannot contribute

If you would like more information about a SEP IRA, please call  
Kades-Margolis at (800) 433-1828, ext. 4, or click here, fill out the form and submit.  We will have one of our associates contact you.

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