SEP IRAs, or simplified employee pension, is a traditional type of IRA that is meant for self-employed people, or small business owners. This type of IRA is good for people who do not have a lot of employees working for their business, or anyone who has freelance income. If you are looking for a great way to provide yourself and your employees a way to save for retirement, then an SEP IRA is right for you. You will want to look into an SEP IRA if you know that you are going to be self-employed for a long time, that way you do not have to change IRA types in the future. SEP IRAs are actually much less complicated than other IRAs, and they have less qualifications and rules about contribution than the others as well. Read the facts about SEP IRAs below to see if this is the right fit for you.

One of the great things about SEP IRAs is that you can open them at a bank, mutual fund company or brokerage firm. You do not have to travel far to open this type of IRA. You will also pay very low, or even no annual account fees. You are eligible to participate in an SEP IRA if you are at least 21 years old, and you have worked for the company for three out of the last five years. You also must have received at least $550 in compensation during the past year. If you are the employer, you do not need to fund contributions every year. If you do choose to make contributions, you must contribute to your own SEP IRA and that of every eligible employee.

With many IRAs, there are a lot of different contribution rules that can be very complicated. However, with SEP IRAs, the rules are less complicates, and you actually have much more flexibility with contribution. The percentage of compensation can vary between 0% and 25% depending on the year, and the maximum contribution for 2015 is $53,000. Each employee that is eligible must receive the same percentage of contribution. The deadline to file is April 15th, the same as tax day for self-employed individuals and small-business owners. Like other IRAs, there are rules that come along with withdrawals. You have to start taking minimum required distributions starting at age 70 and 1/2. There is also a 10% early withdrawal penalty if you withdrawal money before you turn 59 and 1/2, but there are some exceptions to this rule.

When you are a small business owner, SEP IRAs are very appealing. They are very easy and inexpensive to set up, and the contributions are tax-deductible, making tax season something that can be looked forward to. It is also an extremely flexible plan. You do not have to contribute to the fund if you have had a tough year financially or if other bills need your attention more than the IRA. If your business had a wonderful year, then you can contribute a large amount because there is an elevated contribution limit compared to other IRAs.

If you have a small business, or you are self-employed, you should look into getting an SEP IRA. With the ease of setting up one of these IRAs, it will not take much time to make sure that you and your employees get a great retirement fund that will provide them with peace of mind when the time to retire comes along.