SEP IRA

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 1099’s or K-1s to worry about.

Contributions

  • Individuals can contribute up to 25% of net income.
  • Contributions may be large, up to $55,000 per year plus up to an additional $55,000 for your spouse = $110,000
  • 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 $55,000 for you and $55,000 for your spouse. Total about $110,000 and 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 70 ½ (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 blog to get started today!

SEP Self Direct IRAs are are eligible for sole proprietors and small businesses with up to 25 employees

Learn more about the other types of Self Directed IRA accounts we offer or contact us today to learn more! 888-795-7950