SEP and SIMPLE IRAs offer small business owners and their employees a simplified retirement savings solution—and with increased federal and state emphasis on small business employers assisting their employees with retirement readiness, now is the time to consider the benefits of a SEP or SIMPLE IRA.
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SEP IRA |
SIMPLE IRA |
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Ideal for |
Sole proprietorships and businesses with few employees |
Businesses with up to 100 employees |
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Eligible businesses |
Any employer may establish |
Any employer that has less than 100 employees and does not maintain another retirement plan may establish |
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Eligible employees |
Must include employees who are at least age 21, have worked for your business at least three of the last five years, and earned at least $750 in compensation in 2024: |
Must include employees earning at least $5,000 in the current year and any two preceding years |
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Employee contributions |
Generally, not allowed |
Up to $16,000 in 2024 |
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Employer contributions |
Flexible; limited annually to the lesser of $69,000 for 2024 or 25% of compensation. Employers don’t have to contribute every year, but when they do, they must contribute to all participants who performed services during the year for which the contributions are made |
Mandatory contributions; either matching up to 3% of compensation or 2% nonelective for each eligible employee |
Download this resource for more information about key benefits and differences among Ascensus’ various retirement plan offerings.
