Simplified Employee Pension Individual Retirement Account (SEP IRA) is a retirement investment plan specially created for self-employed individual and business owners. A Simplified Employee Pension Individual Retirement Account (SEP-IRA) is a type of IRA specifically made for business owners and self-employed individuals. It is available only in the United States. If you are running a business with no employees, the cost to set up the Self Employed plan is low. If you run a business with employees, the same plan will apply for your employees too and they also receive the same benefits from the plan.

What type of business can get SEP IRA?
1. Self-Employed Individual
2. Sole Proprietorship
3. Partnership
4. Small Corporation
5. Non-Profit Corporation
6. Freelancers

Why SEP IRA?
A SEP IRA has more advantage for small business owners than larger corporations. When compared to traditional retirement plans like 401k contribution plan, this plan has high contribution limits. It is the cost-efficient way and best retirement plan for business owners and their employees. Setting up a SEP IRA account does not mean to engage in the SEP contributions. The business owners have the option to engage in future contribution years or not. The main advantage is the SEP-IRA is retroactive. They can also change their
decision based on the performance of their business. You can change the plan at any time whenever a new rule is passed.

SEP IRA Contribution Limits:
The contribution limits in the SEP-IRA is based on the employee’s compensation and it will be contributed by the employer. It must not exceed the minimum value of 56,000 dollars in the year 2019 (previously it was 55,000 dollars in 2018) or 25% of employee’s compensation.

Eligibility to get SEP IRA Plan:
The basic employee eligibility level was detailed as follows:

1. He/She must be older than 21
2. Should worked for the employer for at least 3 of the last 5 years.
3. Received more than 600 dollars as compensation from the business in the year
2019. It changes for every year according to COLA Adjustments.

Employees who quit, fired or died during the year are eligible to participate in the SEP plan.
The IRS declared that to detect employee eligibility level, an employer may use less
restrictive requirements. So, part-time workers and seasonal workers can also participate in
the SEP plan. For more details, visit https://sproutira.com/

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