SEP IRAs: Conclusion

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By Denise Appleby

Simplified Employee Pension (SEP) IRAs are an IRA-based employer plan, so 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 is eligible to participate in the SEP.
  • Any employer with one or more employees 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.


by

Denise Appleby

Denise Appleby
Denise Appleby is founder and owner of Appleby Retirement Consulting,which provides technical consultation, content, coaching, writing, editing and training services on related topics.


With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
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