SEP IRA – What Is It?

Working for a large company often brings many benefits, including the ability to participate in some sort of retirement savings or investment plan. However, with an increasing number of Americans working for themselves or owning their own corporation, the ability to participate in such plans may be limited. This void can be filled by the self-directed SEP (Simplified Employee Pension) IRA.

The SEP IRA offers individuals a low-cost retirement option. In essence, the SEP retirement plan allows you to make SEP IRA contributions for you (and your employees) to an account that acts like a Traditional IRA. With no or very low start-up and operating costs, the SEP IRA allows you to contribute up to 25% of your (or your employee’s) compensation, up to $54,000 for 2017, to a SEP IRA retirement account.

Like any IRA, you can choose a wide variety of investment options, including stocks, bonds, and mutual funds. Additionally, since you established your SEP IRA as self-directed, you open your account up to alternative assets such as real estate, tax liens, precious metals and so much more. Having control of your investments and diversifying your portfolio is a way to stay active with your retirement planning. Alternative assets also offer the opportunity for growth outside of the volatile and unpredictable world of Wall Street.

A self-directed SEP IRA can help you and your employees reach retirement goals. The plan can work if you are a sole proprietor, self-employed or a partner or corporation. You can make SEP IRA contributions for yourself as well as your employees, with the flexibility to change contributions each year and not be weighed down with excessive administrative costs. Additionally, with the ability to invest in traditional mutual funds, stocks, and bonds as well as alternative assets such as real estate, you can reach your retirement goals more easily.

To learn more, check out our whitepaper: Boost Your Self-Directed IRA Balance with a SEP IRA.

Tags: all things retirement, alternative investments, ira custodian, IRA rules, SEP IRA