SEP Plan

[SEP plan]

What is the definition of SEP Plan?

A Simplified Employee Pension (SEP) plan is a type of retirement plan that allows employers to contribute to traditional Individual Retirement Accounts (IRAs) set up for employees, including themselves if self-employed. Contributions are made directly to the IRA of each participating employee.

Using SEP Plan in an Example

In a SEP Plan, an employer can contribute up to 25% of each employee's pay into their SEP-IRA accounts. These contributions are tax-deductible for the employer and tax-deferred for the employee until withdrawals begin, typically at retirement.

Using SEP Plan in a sentence

Our company offers a SEP Plan, which means part of your salary can be contributed into a retirement account before taxes, increasing your savings and reducing your taxable income.

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