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SEP IRA

SEP IRA: A flexible and easy to manage retirement plan

A Simplified Employee Pension (SEP) IRA is a retirement plan that allows for higher, tax-deductible contributions, tax-deferred growth, hassle-free account maintenance, and a flexible contribution schedule, making it a good choice for small business owners and self-employed individuals. 

SEP IRA plan details
Best For:
  • Self-employed individuals and small business owners
Tax Benefits:
  • Tax-deductible contributions for the business
  • Tax-deferred growth potential on contributions
Employee Contribution Limits:
  • Not applicable
Employer Contribution Limits:
  • 2022 Tax Year: Lesser of 25% of compensation or $61,000
  • 2023 Tax Year: Lesser of 25% of compensation or $66,000
  • Employer is not locked into making a contribution each year and can decide whether and how much to contribute to employees' accounts (Note: if employers do contribute, must contribute for all participants who are eligible for the plan)
Date Account Must be Opened By:
  • New account must be opened prior to the employer's tax return due date plus extensions (Tax return due date generally: April 15. Extension due date generally: October 15)
Funding Deadline:
  • Account must be funded prior to the employer's tax return due date plus extensions
Employer Administrative Responsibilites:
  • Notification to employees of employer contribution
  • Employer must complete and retain Form 5305-SEP or other plan documents in their records. Employees must receive a signed copy
  • No plan tax filings with the IRS
Withdrawals:
  • If you turned 70 1/2 prior to January 1, 2020: Minimum required distributions start at age 70 1/2
  • If you turn 70 1/2 after January 1, 2020: Minimum required distributions start at age 72
  • 10% early withdrawal penalty if under age 59 1/2 (exceptions may apply)
  • Taxed at ordinary income rate in year withdrawal made

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TD Ameritrade does not provide tax advice. We suggest that you seek the advice of a tax-planning professional specifically suited to the needs of small business owners.

Taxes related to TD Ameritrade offers are your responsibility. All Promotional items and cash received during the calendar year will be included on your consolidated Form 1099. Please consult a legal or tax advisor for the most recent changes to the U.S. tax code and for rollover eligibility rules.

**Commissions, service fees, and exception fees may apply. Please review our commission and fees for details.

TD Ameritrade was evaluated against 14 other online brokers in the 2022 StockBrokers.com Online Broker Review. The firm was rated #1 in the categories "Platforms & Tools" (11 years in a row), "Desktop Trading Platform: thinkorswim®" (10 years in a row), "Active Trading" (2 years in a row), "Options Trading," "Customer Service," and "Phone Support." TD Ameritrade was also rated Best in Class (within the top 5) for "Overall Broker" (12 years in a row), "Education" (11 years in a row), "Commissions & Fees" (2 years in a row), "Offering of Investments" (8 years in a row), "Beginners" (10 years in a row), "Mobile Trading Apps" (10 years in a row), "Ease of Use" (6 years in a row), "IRA Accounts" (3 years in a row), "Futures Trading" (3 years in a row), and "Research" (11 years in a row). Read the full article.

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