SEP IRA featuring Vanguard investments
A SEP (Simplified Employee Pension) IRA is an easy-to-administer retirement plan for anyone who is self-employed, owns a business, employs others, or earns freelance income. Employers are generally the sole contributors, but employees may also be able to make traditional IRA contributions to the SEP IRA.
How much can you contribute?
Review the contribution limits below to see if a SEP IRA is the right fit for your business.
Employer contribution limits
You can contribute up to 25% of the employee's total compensation or a maximum of $69,000 for the 2024 tax year, whichever is less.
If you're self-employed, your contributions are generally limited to 20% of your net income. The eligible compensation limit, indexed for inflation by the IRS, is $345,000 for 2024.
Employee contribution limits
Unlike other plans, employees can't defer their salary to make contributions to a SEP IRA. They may be able to make traditional IRA contributions to a SEP IRA of up to $7,000 ($8,000 for employees age 50 or older) for the 2024 tax year.
This amount is the total contribution allowed by the IRS that employees can make to all their IRAs (SEP, traditional, or Roth) each year.
Who can participate?
Generally, employees must be allowed to participate if they’re 21 or older, earn at least $750 in the tax year, and have worked for you in at least three of the last five years. You may also choose to set less restrictive eligibility requirements.
Refer to the IRS SEP IRA Plan FAQs for more details.
Start your plan now
Exclusively Vanguard funds
With the Ascensus SEP IRA featuring Vanguard investments, you can choose from a variety of Vanguard mutual funds.
There is a $20 annual fee per Vanguard fund per account holder (employer funded) and a $20 annual fee per participant for custodial services.
With the SEP IRA featuring Vanguard investments, certain employee notifications are required annually—but there are no IRS reporting rules.
- All contributions to your SEP IRA belong to you immediately, and you can withdraw them at any time (associated taxes and penalties may apply).
- If you withdraw before age 59½, you're subject to a 10% federal penalty tax. Certain exceptions may apply. You'll pay ordinary income tax on any taxable distributions.
- You cannot take a loan from your SEP IRA.
