(Simplified Employee Pension plan)

Plan for self-employed individuals and small businesses

  • Flexibility with employer contributions
  • Employer contributions are generally deductible as a business expense
  • Offers a full range of investment choices
  • Use the Small Business Selector to find a plan

Contribution Limit

Maximum total contributions up to $66,000 in 2023 or 25% of compensation (or 20% of net earnings from self-employment for self-employed individuals), whichever is less, with compensation taken into account capped at $330,000 in 2023


Self-employed individuals without retirement plan coverage1

Why a SEP IRA?

Eligibility information

Available for self-employed individuals and owners of small businesses. Eligible employees include all who are age 21 or older, receive annual compensation of $750 or more for the year, and have worked for the company for at least three of the past five years. Less restrictive eligibility requirements may be elected by the employer.


Diversify with a choice of mutual funds, ETFs, stocks, and more

Reduced administrative requirements

For example, IRS Form 5500 filing is not required if certain requirements are met

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See all FAQs

Already have a SEP IRA? Contribute now.

Can an individual make contributions to a SEP-IRA while also contributing to a Traditional IRA?

Yes. However, since an individual will be considered an active participant in an employer-sponsored retirement plan, some or all of their personal IRA contributions may not be deductible. Refer to the Contribution Limits & Deadlines table for more information.

How much can a sole proprietor or unincorporated business contribute to a SEP-IRA?

If a business owner receives compensation as personal income, such as a sole proprietor or unincorporated partnership, the annual contribution limit is up to 20% of their net adjusted self-employed income or net adjusted business profits.

Is it possible not to include employees in a SEP-IRA plan?

All employees age 21 or older who have worked for the business owner in three of the past five years and earn $650 or more must be included.

What are the basic distribution rules for a SIMPLE IRA?

Generally distributions from a SIMPLE IRA are subject to the same distribution rules as a Traditional IRA. SIMPLE IRA distributions may be taken at any time and are taxable in the year distribution occurs. Withdrawals taken prior to age 59½ are subject to an additional 10% early distribution penalty. However, if a distribution from a SIMPLE IRA is taken within 2 years of first participation in the plan, the 10% early distribution penalty is increased to 25%.

Can I open a SEP-IRA if my business has been open less than five years?

Yes, a business owner can use less restrictive participation requirements than those listed by the IRS, but not more restrictive ones. For example, IRS participation requirements state that an employee must have worked for the company in at least three of the past five years. Employers are permitted to decrease or remove this requirement; however they are not permitted to increase it. This also applies to self-employed business owners.

Explore similar accounts

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