Retirement plans for self-employed or small businesses.
A Simplified Employee Pension Plan or SEP is a retirement plan that is commonly used by self-employed individuals and small businesses with 25 employees or less. A SEP Plan is fully funded by the employer and allows the employer to contribute pre-tax dollars to each employees account where the earnings grow tax-deferred. The employer must contribute the same percentage to each employees account. An employer can contribute the lesser of 25% of compensation or $46,000 each year to eligible employee's accounts.