SEP IRAs: Conclusion
AAA
  1. SEP IRAs: Introduction
  2. SEP IRAs: Eligibility Requirements
  3. SEP IRAs: Contributions
  4. SEP IRAs: Distributions
  5. SEP IRAs: Conclusion

SEP IRAs: Conclusion

By Denise Appleby

A Simplified Employee Pension (SEP) IRA is an IRA-based employer plan. A business owner who decides to adopt a SEP for his or her business will be solely responsible for funding the plan.

Let's recap:

  • Generally, any employee who is at least 21, earns at least $550 per year, and has worked three out of the five preceding years for the employer is eligible to participate in the employer's SEP Plan for the current year.
  • Any employer may establish an SEP plan. This includes sole proprietorships, partnerships, corporations and non-profit organizations.
  • An attractive feature of the SEP plan is that employees may use the same account to which SEP contributions are made for their regular Traditional IRA contributions.
  • Contributions to SEP IRAs are immediately 100% vested, which means employees may take the contributions at any time, regardless of whether or not the employee still works for the employer's business.
  • Because the funding vehicle for a SEP is a Traditional IRA, the distribution rules of a Traditional IRA also apply to SEP assets.

  1. SEP IRAs: Introduction
  2. SEP IRAs: Eligibility Requirements
  3. SEP IRAs: Contributions
  4. SEP IRAs: Distributions
  5. SEP IRAs: Conclusion
RELATED TERMS
  1. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  2. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  3. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  4. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  5. Medigap

    Also called Medicare Supplement Insurance, Medigap is health ...
  6. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  1. When can benefits be received from a provident fund?

    Find out when participants in provident funds can begin receiving benefits, including how funds can be used to finance important ...
  2. Is Social Security Income a perpetuity?

    Find out why Social Security income is not classified as a perpetuity, including what constitutes a perpetuity and the basics ...
  3. What types of investments are allowed in a provident fund?

    Read about the types of investments allowed in various provident funds around the world, including the Indian, Malaysian ...
  4. How does a provident fund compare to U.S. Social Security?

    Find out how provident funds compare to the U.S. Social Security program, including examples of income limits and contribution ...

You May Also Like

Related Tutorials
  1. Fundamental Analysis

    Ethical Investing Tutorial

  2. Bonds & Fixed Income

    Investing For Safety and Income Tutorial

  3. Retirement

    Consolidating Your Retirement Money

  4. Retirement

    Analyzing The Best Retirement Plans And Investment Options

  5. Mutual Funds & ETFs

    Guide To ETF Providers

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!