Is a SEP IRA a traditional IRA?
Fundamentally, a SEP IRA can be considered a traditional IRA with the ability to receive employer contributions. 1 A SEP IRA is an employer-sponsored retirement plan that can be set up by sole proprietors, partnerships, and corporations. 2 You must have earned at least $650 in 2022 from an employer to qualify for a SEP ($750 in 2023). 3
Should I adopt a simplified employee pension (SEP) IRA plan?
Why not consider adopting a Simplified Employee Pension (SEP) IRA plan? In a SEP-IRA plan, you can make employer contributions of up to 25% of each employee's pay directly to an IRA set up for each eligible employee, including yourself. It's easy to get started with a SEP-IRA.
What are the advantages and disadvantages of a SEP IRA?
While the SEP IRA plan has great advantages for employers, their employees, and sole proprietors with no employees, it has a few rules that could prove a disadvantage for some. For one, if employers want to make a contribution to their own accounts, they must make contributions to every eligible employee's account, as well.