Simplified Employee Pension (SEP) Definition

Term Definition
Simplified Employee Pension (SEP) is a retirement plan that can be established by employers.

Extended Definition
SEP is the simplest retirement plan available. It is an IRA that lets employers make annual contributions up to a fixed maximum limit. Unlike other retirement plans, SEP does not burden the employer with fixed yearly payments. The plan offers the flexibility to vary the percentage of contribution based on the financial condition of the company. Yearly payments are not compulsory and can be forgone if necessary. A tax deduction is offered on the contributions made to the plan.

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What is a Simplified Employee Pension (SEP)?