The Business of Retiring: Why Small Business Owners Need an SEP IRA


By: Naftali Feig

Plan for Your Future Today

Saving for the future is something that you can already begin planning for today. There are many options for setting up an IRA, but most will end up costing you more than the savings you will gain.

An SEP, or Simplified Employment Pension, on the other hand, is an invaluable asset particularly for small business owners. Not only is it a low-cost alternative to the other IRA options, but it also allows a self-employed or small business owner like yourself to set up an easy retirement fund that won’t require regular maintenance. In fact, here are a few more benefits to creating an SEP IRA for yourself.

create a plan for saving money

Retirement Funds Made Simple

1. To begin with, SEP’s do not have the same initial costs that most retirement plans do. While you are not losing out on anything by setting one up, you are gaining much in the long run. In addition, you may even be eligible to a tax credit of several hundred dollars for the first three years to offset the nominal startup costs.


2. When running a small business, you can really feel alone. You lack the extensive policies and corporate benefits that come from working in a larger enterprise. What’s more, you have to do everything for yourself, and that includes looking out for your own retirement fund. As such, small business owners can gain so much by setting up an SEP IRA. With this system in place you are automatically putting away a little bit each month for your retirement without having to feel the pinch or put in any additional effort.


3. The percentages can run up to 25% of the employee’s salary. When invested over time, that can add up to a very comfortable retirement fund.


4. These pension plans accrue no taxes for your business, and, in fact, are tax-deductible.


5. An SEP is also more flexible, making it easier for your small business to manage the payments. You can contribute to the fund monthly if this works for you, but you don’t have to. If a yearly payment is a better option for you, perhaps right after tax returns have come in or some other major income flux, the SEP system accommodates that type of deposit, as well.


6. The funds are generally sealed until the age of retirement, 59.5. However, there are exceptions to the rule such as student loans or mortgage options. In addition, as long as you are working, you can continue to accrue SEP funds, even past the age of retirement.


7. There are a range of reputable and easy to work with companies that will help you set up your SEP in no time. TradeKing, OptionsHouse and OptionsXpress are just a few of the well-known firms that will be glad to assist you in your efforts towards laying out a better future for yourself and your employees.



Between the flexibility, cost-efficiency and convenience, it is not surprising that more and more enterprising companies are beginning to create SEP IRA’s for themselves and their employees every day. Discover more about setting up an IRA for yourself or your business, and buy yourself some peace of mind.

New to the idea of opening a retirement account? Read through one of our helpful, introductory articles to learn everything you need to know about IRAs from choosing the right IRA account for you to how to help grow your IRA.


  About Naftali Feig  

 Naftali Feig holds a bachelor’s degree in finance as well as an MBA.  He has over
 15 yearsof professional experience in financial management, reporting, and
 project management.He has worked as a controller and operations manager
 and owns his own real estateinvestment company.He believes relationships are
 the key to a successful business.He currently provides consulting and solutions
 to entrepreneurs starting their own brokerage businesses.

Advertising Disclosure

This site is a free online resource that strives to offer helpful content and comparison features to its visitors. Please be advised that the operator of this site accepts advertising compensation from companies that appear on the site, and such compensation impacts the location and order in which the companies (and/or their products) are presented, and in some cases may also impact the rating that is assigned to them. To the extent that ratings appear on this site, such rating is determined by our subjective opinion and based on a methodology that aggregates our analysis of brand market share and reputation, each brand's conversion rates, compensation paid to us and general consumer interest. Company listings on this page DO NOT imply endorsement. Except as expressly set forth in our Terms of Use, all representations and warranties regarding the information presented on this page are disclaimed. The information, including pricing, which appears on this site is subject to change at any time.

Top 5 IRA Providers