SEP IRA

SEP IRA (Simplified Employee Pension) plan provides business owners with a simplified method to contribute large amounts toward retirement.

A SEP IRA (Simplified Employee Pension) plan provides business owners with a simplified method to contribute large amounts toward retirement. SEP IRAs are simple, low cost, and flexible. Also, you are not locked into making annual contributions.

Tax Benefits

  • Contributions are tax-deferred, meaning that they are not subject to federal income tax until the time of distribution.
  • Proceeds from the SEP Self Directed IRA investment go directly to the IRA with no Federal Income Tax or Federal Tax filing.
  • SEPs require no annual tax filing. There are no 1099s or K-1s to worry about.

Contributions

  • Individuals can contribute up to 25% of net income.
  • Contributions may be large, for 2020, up to $58,000 per year plus up to an additional $58,000 for your spouse = $116,000.
  • For example: “This year my business earned $700,000. My spouse and I are the only employees. How much can we contribute to our SEP IRAs?” You can max out the contributions. It will be about $58,000 for you and $58,000 for your spouse. It is all deductible from this year’s earnings.
  • Contributions are considered a business expense.

Distributions

  • Distributions are penalty free after age 59 ½ and must begin by age 72 (Required Minimum Distribution).
  • Distributions are subject to federal income tax.

Who is Eligible?

To be eligible for a Self Directed SEP IRA, you must first own a business. If you do not yet own a business, check out this video to get started today!

SEP Self Directed IRAs are eligible for sole proprietors and small businesses with no full-time employees.

Learn more about the other types of Self Directed IRA accounts we offer or contact us today to learn more! 312-795-0988