IRA
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What is an SEP IRA? | SEP IRAs Explained
Titan's Emily Bice goes over everything related to SEP IRAs, the perfect retirement plan for small-business owners and self-employed people.
Video Transcript
A SEP IRA or a simplified employee pension plan is another kind of tax deferred retirement account available to certain investors. SEP IRA plans are specifically designed for small business owners and independent contractors who are making 1099 income, meaning their income doesn't come from working as an employee at a company. SEP IRA plans allow business owners, contractors and creatives an opportunity to save money for retirement, as if they are contributing to a company sponsored 401K. SEP IRA plans have many perks.
The maximum amount that can be contributed annually is higher than that of an IRA. As of 2021, contributions cannot exceed 25% of the employees compensation for the year, or a total of $61,000 for 2022. These plans also do not come with as many of the startup or operating costs a conventional employer sponsored retirement plan may pose. Similar to 401K's and regular IRA's, SEP IRA plans are a great way to get started on saving for retirement.
