Business owners can provide retirement benefits to their employees with a SEP-IRA plan. A SEP-IRA allows eligible employees (and self-employed individuals) to enjoy all the benefits of a Traditional IRA, but with higher contribution limits.

Features & Benefits

  • Employers get a tax deduction for all contributions to a SEP
  • Money contributed to a SEP-IRA belongs to the employee immediately
  • Contributions limits are higher than with other types of IRAs
  • Monies are invested tax-deferred
  • Funds in a SEP can be invested the same way as any other IRA

Who's Eligible?

  • Any employer with one or more employees, including sole proprietorships, partnerships, corporations, Subchapter S corporations and non-profit organizations
  • Anyone earning self-employed income by providing a service, even if he/she is covered by a retirement plan at his/her full-time job

How Does it Work?

The plan is first established by an employer, who then makes tax-deductible contributions on behalf of all eligible employees into separate SEP-IRA accounts.

Account Fees & Minimums

Vary based on investment choices

Contribution Limits

Employers Can contribute a maximum of 25% of eligible compensation -- up to $51,000 for 2013 and up to $52,000 for 2014.
Self-employed Limit is based on net-profit from the business
  • The same percentage must be used for each eligible employee, including the employer
  • Contributions in excess of the stated limits are subject to a non-deductible penalty tax of 6% of the excess amount contributed

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This material is meant to educate and not to provide legal, tax, accounting or investment advice. PNC and its vendors do not provide legal, tax or accounting advice. You should seek the advice of an investment professional to tailor a plan to your particular needs.

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