Contribute to Retirement Savings with a SEP IRA
Small businesses can help workers increase their retirement savings by contributing a percentage of the employees’ earned income to a Simplified Employee Pension (SEP)1. Employers offering SEPs cannot provide other retirement plans, except another SEP. The SEP – unlike the SIMPLE IRA – does not allow employee contributions, but an option exists for eligible workers also to contribute to Individual Retirement Annuities (IRAs).
Why SEPs are Beneficial
- Simple to maintain, with limited recordkeeping
- Low cost
- Useful for attracting and retaining employees
- Immediate 100-percent vesting
- Employee ownership of the SEP, which is entirely funded by the employer
- Earnings are tax-deferred until withdrawal2 (usually at retirement)
An SEP option exists for self-employed individuals and allows contribution amounts based on how the business is set up:
- Self-employed individuals with incorporated businesses can contribute up to 25 percent of his or her W-2 income, up to the IRS limit.
- Contributions for sole proprietors are based on 20 percent of adjusted earned income.
Your Representative will prepare a customized plan that best meets your specific needs and budget. Get started by connecting with your Representative.
WEB70 - 4/1/2019