Simplified Employee Pension Plans (SEP IRAs) are a low cost retirement plan solution designed for self-employed individuals and small business owners. Similar to Profit Sharing Plans, SEP IRAs are funded solely by the employer and provide the flexibility of discretionary contributions. They offer higher contribution limits associated with larger retirement plans but with minimal plan administration.
In addition, in SEP IRAs, employers may be able to integrate their plan with Social Security which can result in higher proportionate contributions for employees earning above the social security wage base.
Designed for corporations, partnerships, sole proprietorships or self-employed individuals with earned income.
Employee coverage requirements
- Must include employees age 21 and older with two or more years of service and earned income of at least $600 annually.
- Worked three out of the proceeding five years.
- Employer may set less restrictive requirements.
- May exclude:
- Union employees.
- Nonresident aliens with no U.S. income.
- Immediate 100% vesting in contributions.
Funding the SEP IRA and contribution limits for 2016
This plan is funded solely by the employer. The maximum contribution permitted is the lesser of 25% of eligible compensation or 20% for self-employment income not to exceed $53,000 which is based on a maximum salary of $265,000. Tax deductible employer contributions must be made by your company’s tax-filing deadline, including extensions.
- Loans and hardship distributions are not permitted.
- Withdrawals are permitted after a triggering event occurs: retirement, termination of service, death or disability.
- Generally withdrawals are penalty-free after age 59 ½. Certain exceptions may apply; see IRS Publication 590-B for additional information.
- No annual filings for the plan.
- Annual Top Heavy Testing required.
OppenheimerFunds is a high conviction global leader in asset management with a history of providing long-term innovative investment strategies, combined with intelligent risk taking, to help meet investors’ needs.
- No plan installation fees.
- Low annual maintenance fee per participant 1:
- $25 for account balances under $50,000.2
- Fund expenses apply.
Call 800.255.2750 to talk to your Regional Advisor Consultant for more information.
1 Other account-related fees (if applicable), and fund expenses apply.↩
2 The fee will be waived if the total investments in Oppenheimer funds retirement and/or nonretirement accounts, excluding OppenheimerFunds direct-sold 529 plans, is $50,000 or more.↩
Subscribe to the OppenheimerFunds blog
Get timely market perspectives directly in your inbox.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency and involve investment risks, including the possible loss of the principal amount invested.