Established by the employer, Simplified Employer Plan (SEP) IRA’s permit larger contributions than regular IRA's. An employer may consist of a sole business owner, a partnership or a corporation. With a SEP IRA, employers can make contributions toward their employees' retirement income, including their own IRA.
- The employer is allowed to deduct a percentage of the participant's compensation
- SEP contributions are deductible by the employer and are not included in the employee's income for the year
- SEP contributions are not subject to Federal withholding, FICA or FUTA taxes, unless you are self-employed
- Interest earned on the SEP deposit is sheltered from federal and most state income taxes until withdrawals are made at retirement