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SEP IRA
SEP stands for “Simplified Employee Pension,” and
these plans only allow for employer contributions. As such,
SEP plans allow much higher contribution amounts than most
other retirement plans. Employers or sole proprietors may
contribute up to 15% of compensation or $24,000 per employee--whichever
is less.
- A minimum annual contribution is not required.
- The SEP may be used in conjunction with other types of
retirement plans.
- All contributions grow tax deferred until withdrawn.
- You are 100% immediately vested.
- Withdrawals made before age 59½ are subject to
a 10% federal tax penalty.
- If you withdraw assets gradually, instead of as a lump
sum, your balance will continue to grow tax deferred.
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