SEP IRA

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retirement

Set yourself on the right track, right from the start with a retirement account that uses low-cost mutual funds and rebalances automatically.

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A retirement account for the self-employed

SEP stands for Simplified Employee Pension. SEP IRAs are popular retirement accounts for self-employed individuals and other small business owners.

  • retirement account for the self-employed

    Contribute up to $61,000

    Add money when it’s convenient—up to 25% of your annual compensation, capped at $58,000 for 2021 and $61,000 for 2022.

  • Help offset your income taxes

    Help offset your income taxes

    Your contributions are tax-deductible so you can reduce your tax liability for the year you contribute.

  • lower investment fees

    Shorten your to-do list

    They require minimal paperwork, minimal administrative tasks, and no annual DOL reporting requirements.

Want to compare a SEP IRA and 401(k)?

See our side-by-side comparison

Guideline IRA: built for long‑term growth

  • Intelligent investing

    Intelligent investing

    Our investment portfolios rebalance automatically to help you stay on track for retirement. Learn more

  • No transaction fees

    No transaction fees

    We won’t nickel and dime your account. We don’t charge fees for distributions, rollovers and more.

  • Low-cost funds

    Low-cost funds

    The estimated total cost for our managed portfolios can be under 0.15%

SEP IRA pricing

$8/monthly base fee + 0.08% annual account fee

This account fee comes out to 67¢ a month for every $10,000 saved.

If you are an employer, each employee, including yourself, is charged the same base and account fees. We don’t charge employers a separate fee for opening or funding a SEP IRA.

Save for retirement with confidence

Set up your account in minutes, then use our tools, expertise and support to create your roadmap to retirement.

  • Investment portfolio recommendations

  • Comprehensive Help Center articles

  • Live support via phone or email

Guideline SEP IRA dashboard visual
Guideline SEP IRA dashboard visual

Guideline at a glance

  • 35,000+

    businesses

  • $6B+

    invested for retirement on our platform

  • Forbes

Invest in yourself and your business

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Frequently asked questions

Who can set up a SEP?

You can set up a SEP as long as you are in business for profit, either full time or part time. The business can be run in many forms, including a sole-proprietorship or partnership (self-employment), corporation or a limited liability company. You don’t need to set up a corporation or limited liability company to have a SEP. This means that you can set up a SEP if you are a freelancer, a hairdresser, a consultant, a contractor, or a baker who sells cookies to your friends and neighbors.

Consult your tax advisor if you are uncertain whether the structure of your business will allow for a SEP.

What are the benefits of a SEP?

There are many benefits to establishing a SEP.

  1. You can set up and fund your SEP immediately.
  2. You have until your tax-filing deadline to establish a SEP and make deductible contributions for the previous tax year.
  3. Lower administrative requirements when compared to other retirement plans.
  4. Higher contribution limits than traditional or Roth IRAs.
  5. Flexible contributions rules; you do not have to contribute every year.

How and when can I access my money in my SEP IRA?

You are allowed to take a distribution at any time however all distributions will be included in your taxable income the year they are made. In addition, if you are younger than 59 ½ when the distribution is made, the amount may be subject to an additional 10% tax (early withdrawal penalty).

To take a distribution, you will be required to provide Guideline with the distribution details by completing a form available to you in your account dashboard.

I have employees. Can I add them to my Guideline SEP?

The IRS actually requires you to include eligible employees to your plan. You can add them to your Guideline SEP using our roster management tools—simply provide their name and email address and we will invite them to join your plan and open their own Guideline account.

Your employees will also have the option to establish their SEP IRAs with any SEP provider they choose.

What happens to my SEP if I still have active business or trade, but I no longer have business income?

If you no longer have business income, you have several options including the following:

  1. Leave your account as-is but you will not be able to contribute to it unless you begin earning business income again. If you leave it open, you will still be charged $8/month and a 0.08% account fee if you have a balance.
  2. Transfer your SEP IRA to a Guideline traditional IRA and make any allowable contributions to that account.
  3. Transfer your SEP IRA to a traditional IRA or retirement plan at another financial institution.
  4. Take a cash distribution.

    You should consult with your tax advisor regarding business income status. If you decide your SEP no longer suits your business, learn more about terminating your SEP.

How much can I contribute to my SEP IRA each year?

For the 2022 tax year, you may contribute the lesser of 25% of compensation or $61,000. If you are self-employed, contributions are generally limited to 20% of your net earnings. See IRS Publication 560 for more information. The IRS regularly updates the maximum allowable contribution amount each year.

For each year that you make contributions to your SEP IRA, you must also make contributions to the SEP IRAs for any of your eligible employees.

Please consult with your tax advisor for assistance with calculating your allowable contribution amount.

Do I have to contribute the same percentage of salary for all of my employees?

Yes, you must contribute the same percentage of salary to all of your eligible employees.

Can I make catch-up contributions to my SEP IRA?

Catch-up contributions are not allowed in SEP IRAs.

Do I have to contribute to my SEP every year?

No you do not have to contribute to your SEP every year. This is one of the key benefits of a SEP. If you don’t want to or are unable to contribute for a given year, you can simply choose not to contribute.

Are my SEP contributions tax-deductible?

The contributions you make to your and your employees’ SEP Plans are tax deductible up to certain limits. If you are self-employed, there is a special computation to determine your deductible amount. See the IRS website for additional details and consult your tax advisor regarding the specific deductible limits applicable to you.

Are my SEP contributions to my employees’ SEP IRAs taxable to those employees?

Contributions made to your employees’ SEP IRAs are not taxable income for them. However, any distributions taken from the SEP IRA would be included in their income and subject to applicable taxes. Guideline will provide each employee with a tax form with contribution details every year.

If I participate in a SEP, can I continue to make contributions to a traditional or Roth IRA?

Yes, you can still contribute to a traditional or Roth IRA if you participate in a SEP IRA. The total amount you can contribute to a traditional and/or Roth account is $6,000 ($7,000 if you’re age 50 or older by the end of the year), or 100% of your compensation, whichever is less.

What are my administrative responsibilities for my SEP?

To establish a Guideline SEP you need to complete IRS Form 5305-SEP. In addition, if you have eligible employees, you must add them to your SEP and provide them with a copy of your completed Form 5305. You are required to notify your eligible employees about any SEP contributions that you make to their SEP IRAs annually. Guideline provides this to employees on your behalf annually by distributing a Form 5498 to participants who establish Guideline SEP IRAs. Other than your regular tax filings, there are no additional annual reporting or filing requirements.

Do I need to include 1099 contractors in my SEP?

No, you don’t. The IRS requires you to include all eligible employees in your SEP, but independent contractors are not considered employees for purposes of your SEP and may be excluded. You may also choose to exclude leased employees and employees that participate in a union. Generally speaking, employees become eligible when they turn 21, have worked 3 of the last 5 years, and have earned at least $650 in 2022.

You should speak to your tax advisor to determine how your employees are classified and if they should be included in your plan. You can also view more about the IRS eligibility rules and definition of employees using the links below.

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps#participation

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee