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December 18, 2020 12:48 PM Kate Ashford - Forbes Advisor
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December 20, 2020 6:06 AM
A Simplified Employee Pension (SEP) plan lets self-employed individuals and small business owners establish individual retirement accounts, called SEP IRAs, for themselves and their employees. The SEP IRA works a lot like a traditional IRA, but there are additional rules and benefits you need to understand to decide if this retirement plan is right for your small business.
The Benefits of SEP IRAs
Don’t let the word pension fool you: SEP IRAs are defined contribution retirement plans. Think of SEP IRAs as part 401(k) plan and part traditional IRA, except employers make contributions to the plan. An SEP IRA offers tax-deferred growth for contributions, and withdrawals are taxed as regular income when employees make withdrawals in retirement.