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What is a Simplified Employee Pension (SEP)?

by TurboTax Updated 5 months ago

A Simplified Employee Pension (SEP) or (SEP-IRA) provides business owners with a simplified method to contribute toward their employees' retirement as well as their own.

Contributions are made to an IRA set up for each plan participant and cannot exceed the lesser of:

  • 25% of compensation paid during the year
  • $66,000 for 2023 ($61,000 for 2022)

Investment, distribution, and rollover rules are the same as traditional IRAs.

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