Simplified Employee Pension (SEP) Plan

[SIM-pluh-fied EM-ploy-ee PEN-shun (SEP) plan]

What is the definition of Simplified Employee Pension (SEP) Plan?

A pension plan where only the employer contributes to an individual retirement account (IRA) set up for each eligible employee, providing a simplified method for making retirement contributions.

Using Simplified Employee Pension (SEP) Plan in an Example

A small business owner opts to set up a SEP plan to provide retirement benefits for her employees. She contributes a percentage of each employee's salary to their individual SEP-IRA accounts, which are managed by the employees themselves, choosing their own investments within the account.

Using Simplified Employee Pension (SEP) Plan in a sentence

During the financial planning meeting, the employer discussed the benefits of contributing to the Simplified Employee Pension Plan to ensure employees had substantial retirement funds.

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