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SEP IRA - Plan Advisors

SEP IRA

Should you start a SEP IRA?

Business owners can make tax-deductible contributions into a SEP IRA.


The SEP IRA is easy to set up and has far less administrative tasks than a 401(k) or 403(b). Also, there is no Form 5500 filing requirement with the SEP IRA.


If you have W-2 employees, you are required to make contributions for them as well. For example, if the employer contributes 10% of their earnings into a SEP IRA as an employer contribution, the employer must contribute 10% of the salary to the SEP IRA for each W-2 employee.


The employer has the flexibility to change the company contributions on a yearly basis.

Common SEP IRA questions


Have a question? Contact us.


  • Who can contribute to a SEP IRA?

    If you are self-employed or a small business owner, you can contribute to a SEP IRA at any age. There are no age restrictions for SEP IRA contributions.

  • When do SEP IRA contributions become vested?

    SEP IRA contributions are 100% vested immediately upon contribution, meaning the funds belong to the employee or account holder right away.

  • What is the maximum SEP IRA contribution limit?

    In 2025, the maximum SEP IRA contribution is up to 25% of your compensation or $70,000, whichever is less. If you have employees, you are required to make proportional employer contributions for them as well. Learn more from the IRS.

  • Are SEP IRA contributions tax-deductible?

    Yes, if you are self-employed and file taxes using Schedule C, your SEP IRA contributions are 100% tax-deductible. Business owners can also deduct SEP IRA contributions for themselves and their employees against their federal taxable income.

  • How are SEP IRA earnings and withdrawals taxed?

    Both tax-deductible contributions and earnings in a SEP IRA are taxed as ordinary income when withdrawn after age 59½.

  • What types of investments can be held in a SEP IRA?

    A SEP IRA allows investments in:

    • Stocks
    • Bonds
    • Mutual Funds
    • Exchange-Traded Funds (ETFs)
    • Options
    • Treasury Bills & Notes
    • Certificates of Deposit (CDs)

  • What are the penalties for early SEP IRA withdrawals?

    If you withdraw funds from a SEP IRA before age 59½, you will generally incur a 10% IRS penalty unless an exemption applies. Learn more about early withdrawal exceptions in our Tax Planning Section.

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