Simplified Employee Pension Individual Retirement Account

SEP IRAs are adopted by business owners to provide retirement benefits for the business owners and their employees. There are no significant administration costs for self-employed person with no employees. If the self-employed person does have employees, all employees must receive the same benefits under a SEP plan. Since SEP accounts are treated as IRAs, funds can be invested the same way as any other IRA. 

Eligibility 

1) be at least 21 years of age 

2) has worked for the employer for at least three of the previous five years, and 

3) received at least $500 in compensation for the tax year

Contributions to a SEP plan are deductible, this will lower a taxpayer's income tax bracket at current year, and withdraw are taxed after age 59 1/2.

Contribution limits

SEP-IRA contributions are treated as part of a profit-sharing plan. For employees, the employer may contribute up to 25% of the employee's wages to the employee's SEP-IRA account. For example, if an employee earns $60,000 in wages, the employer could contribute up to $15,000 to the SEP-IRA account.

The total contribution to a SEP-IRA account should not exceed the lesser of 25% of income (20% for self-employed before self-employed tax deduction is included) The maximum SEP IRA contribution for 2023 is$66,000

for more information, please visited : 

https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep