The simplified employee pension IRA (SEP IRA) is a retirement plan that can be established by employers, including self-employed individuals of sole proprietorships, partnerships, corporations & non-profit organizations. The SEP is an IRA-based plan to which employers may make tax-deductible contributions on behalf of eligible employees, including the business owner.

Many small employers favor SEP plans because of eligibility requirements for contributors, including minimum age, years of employment, and a compensation minimum. In addition, an SEP IRA allows employers to skip contributions during years when business is down.

Contributions to SEP IRAs are immediately 100% vested, and the IRA owner directs the investments.

Unlike qualified plans, a SIMPLE IRA plan is easy to administer. The start-up and maintenance costs for SIMPLE IRAs are very low compared to qualified plans and can be opened using SkyOak’s custodian, Charles Schwab.