One type of retirement plan that often fits the needs of small business owners is the Simplified Employee Pension (SEP). Typically, accounts are set up as SEP IRAs, much like traditional IRAs.
What to know about SEPs
As the name implies, it's relatively simple to establish and operate a SEP plan. Unlike some other qualified plans - including 401(k)s - you don't have to file annual reports with the IRS. Here are some other key aspects of SEPs:
Of course, you have other options. The qualified SIMPLE plan is similar to the SEP, but offers a lower contribution limit. For 2018, the limit is $12,500 ($15,500 if you're 50 or older). Finally, you have until your tax return due date, plus extensions, to set up and fund a SEP for the tax year.
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