Self Directed SEP Retirement Plans (Simplied Employee Pension IRA)
A SEP IRA, or Simplified Employee Pension IRA, is a retirement plan that allows employers, including self-employed individuals, to contribute to traditional IRAs for themselves and their employees, offering a simple and tax-advantaged way to save for retirement. (Please consult with your Tax, Accounting or financial planning professional)
Here's a more detailed explanation:
Key Features of a SEP IRA:
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Ease of Setup:SEP IRAs are known for being easy to set up and maintain, making them a popular choice for small businesses and self-employed individuals.
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Tax Advantages:Contributions to a SEP IRA are tax-deductible, and the earnings grow tax-deferred until retirement.
Contribution Flexibility:
Employers can decide each year whether to contribute and how much, without being locked into a specific annual contribution requirement.
Contribution Limits:
For 2024, the maximum contribution to a SEP IRA is the lesser of 25% of the employee's compensation or $69,000.
Investment Options:
SEP IRAs offer the same investment options as traditional IRAs, allowing for a wide range of choices, including stocks, bonds, mutual funds, and ETFs.
Employee Contributions:
While the employer makes contributions to the SEP IRA, employees are responsible for investing their own SEP IRAs.
Self-Employed Individuals:
Self-employed individuals can also use SEP IRAs to save for retirement, with contributions limited to 20% of their net income.
Required Minimum Distributions (RMDs):
As with traditional IRAs, SEP IRA participants must begin taking withdrawals (and paying taxes on them) at age 73.
Who Can Use a SEP IRA?
Small Business Owners: SEP IRAs are a great option for small business owners.
Self-Employed Individuals: Self-employed individuals can also use SEP IRAs to save for retirement.
Employers with Employees: Businesses of any size can establish a SEP IRA for their employees.