Retirement & Savings

What Is a SEP IRA?

A SEP IRA (Simplified Employee Pension) is a US retirement plan that lets self-employed people and small business owners make tax-deductible contributions for themselves and their employees. Only the employer contributes, and contributions are based on a percentage of compensation, up to an annual limit.

Key Features

SEP IRAs are simple to set up and have no required annual contribution, but if the employer contributes, it must contribute the same percentage of pay for all eligible employees.

SEP IRA vs. Solo 401(k)

A solo 401(k) adds employee-style deferrals, which can allow larger contributions at lower incomes.

🧮 Calculate It Yourself

Put SEP IRA into practice with these free calculators — no sign-up, nothing stored.

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🔗 Related Terms

Solo 401(k) SIMPLE IRA Traditional IRA Self-Employment Tax

More Retirement & Savings Terms

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.