With an SEP IRA, you can take advantage of company contributions and accumulate tax-deferred earnings.

A Simplified Employee Pension (SEP) IRA is ideal for self-employed individuals and for small businesses, including nonprofit organizations and owners who want to offer a retirement package without the requirements of more complex plans. Employers make tax-deductible contributions to an employee’s SEP IRA, but employees themselves do not make contributions.

How does an SEP IRA work?

  • The employer must complete and sign a 5305-SEP agreement by the tax return date (plus extensions).
  • Employer must give each employee a copy of the agreement and any other pertinent information.
  • All eligible employees must open an SEP account at their financial institution of choice.
  • Employer will decide annually what percentage of the employee's income to contribute.
  • Contributions/Distributions:
    • Maximum contribution cannot exceed 25 percent of employee's income (up to $53,000 for the 2015 tax year or $52,000 for the 2014 tax year).
    • All contributions must be made by the employer's tax return due date (plus extensions).
    • Contributions can be made on behalf of an eligible employee after age 70½.
    • Traditional IRA distribution rules apply.

Next Steps

Choose a way to request your SEP IRA.

Need more help to plan for retirement?

To learn more about additional IRA investment options, contact your LGFCU Financial Advisor at or 877.367.5428.