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Simplified Employee Pensions (SEPs) and SIMPLE Plans


Introduction

If you are self-employed and looking for true simplicity, look no further. A Simplified Employee Pension (SEP) is an employer retirement plan that uses IRAs as the funding vehicle. In 2017, you can contribute up to $54,000 ($53,000 in 2016), or 25% of compensation, whichever is less. The actual formula limits your contribution to 20% of your net self-employment income. You can even make your regular IRA contribution to your SEP, in addition to your regular SEP contribution.

SUGGESTION: Your contribution can vary from year to year; you can even skip contributions indefinitely. While this is probably not in your best interest, you also don't have to be bothered with complicated plan documents or annual filing requirements.

 

IMPORTANT NOTE: As in a regular IRA, you can't borrow from a SEP, nor can you use the assets as collateral for a loan. In addition, the rules against putting collectibles in your IRA also apply to SEPs.



Investments and Insurance products:

NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
NOT A BANK DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY


Securities and advisory services are offered through Santander Investment Services, a division of Santander Securities LLC. Santander Securities LLC is a registered broker/dealer, Member FINRA and SIPC and a registered investment advisor. Insurance is offered through Santander Securities LLC or its affiliates.