Simplified Employee Pension (SEP), is designed for self-employed individuals or small businesses with less than 25 employees. The SEP allows for pre-tax contributions toward retirement without getting involved in a more complex qualified plan such as a 401(k). Contributions to a SEP are tax deductible and compound tax-deferred until withdrawn, pending that the distribution is taken after the account holder reaches 59 ½ years of age. Additional information related to SEP accounts can be found here.
- Less complex and costly than a 401(k)
- Allows individuals to contribute larger amounts
- May qualify for larger tax deductions