What is a SEP?
Known as a SEP and/or SEP-IRA, a Self-Directed Simplified Employee Plan is a retirement plan established by an employer. A SEP permits employers to make deductible contributions for participating employees. These contributions are made to traditional IRAs. Employers choose how much they want to contribute to a SEP in any given year, up to 25% of earned income (with certain dollar limits). The percentage must be the same for each employee every year.
Self-Directed Simplified Employee Plan Defined
If your current plan doesn’t allow you to choose how to invest, you can transfer all or part of your account to a self-directed SEP. This is the beauty of a self-directed retirement account – you decide how to invest. After all, who knows your hopes and dreams better than you?
Who Can Establish a SEP?
SEPs can be opened by any type of business entity, including a sole proprietorship, a corporation or a partnership. In the case of sole proprietorships, the business owner is considered the employee for plan purposes.
You Should Consider a Self-Directed SEP If Any of the Following Apply
Self-Employed: You are a self employed as an independent contractor or sole proprietor, or are part of a partnership, C-Corp, or an S-Corp. you should consider opening a Self-Directed SEP account.
Greater Investment Choices: You are unsatisfied with the returns offered by your current retirement account. If you’re getting standard Wall Street offerings like mutual funds, stocks and bonds and want a wider choice of investments like real estate, mortgages, tax liens, notes and more, then a Self-Directed SEP is for you.
Account Flexibility: If you don’t want to be locked into a certain agreement every year (eg, making contributions annually), then a Self-Directed SEP is a viable option. Low Administrative Costs: Legal, set-up and administrative costs are usually considerably less than other qualified plans. 5 Benefits of a Self-Directed Simplified Employee Plan(SEP Account)Besides the obvious benefit of gaining control over how you invest for your retirement, a Self-Directed SEP.
Keep More of Your Paycheck: Contributions to your SEP account are not subject to FICA or other tax withholdings (this does not apply to self-employed individuals).
Employer Benefits: For employers, all SEP contributions are deductible.
Shelter Earned Interest: For all SEP deposits, all interest earned is not taxed until retirement, when withdrawals are made.
Sizeable Account Growth: Because of compounding, SEP retirement accounts can grow into huge nest eggs.
Contact a Self-Directed IRA specialist to establish a self-directed SEP IRA. |
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