A SEP (Simplified Employee Pension) IRA is an easy-to-administer retirement plan for anyone who is self-employed, owns a business, employs others, or earns freelance income. Employers are generally the sole contributors, but employees may also be able to make traditional IRA contributions to the SEP IRA.
Review the contribution limits below to see if a SEP IRA is the right fit for your business.
You can contribute up to 25% of the employee's total compensation or a maximum of $69,000 for the 2024 tax year, whichever is less.
If you're self-employed, your contributions are generally limited to 20% of your net income. The eligible compensation limit, indexed for inflation by the IRS, is $345,000 for 2024.
Unlike other plans, employees can't defer their salary to make contributions to a SEP IRA. They may be able to make traditional IRA contributions to a SEP IRA of up to $7,000 ($8,000 for employees age 50 or older) for the 2024 tax year.
This amount is the total contribution allowed by the IRS that employees can make to all their IRAs (SEP, traditional, or Roth) each year.
Generally, employees must be allowed to participate if they’re 21 or older, earn at least $750 in the tax year, and have worked for you in at least three of the last five years. You may also choose to set less restrictive eligibility requirements.
Refer to the IRS SEP IRA Plan FAQs for more details.
With the Ascensus SEP IRA featuring Vanguard investments, you can choose from a variety of Vanguard mutual funds
There is a $20 annual fee per Vanguard fund per account holder (employer funded) and a $20 annual fee per participant for custodial services.
With the SEP IRA featuring Vanguard investments, certain employee notifications are required annually—but there are no IRS reporting rules.
