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 2024, up to $69,000 per year plus up to an additional $69,000 for your spouse = $138,000.
- 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 $69,000 for you and $69,000 for your spouse. It is all deductible from this year’s earnings.
- Contributions are considered a business expense.
- For 2025, it’s up to $70,000.
Distributions
- Distributions are penalty-free after age 59 ½ and must begin by age 73 (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
