Simplified Employee Pension (SEP)

A Simplified Employee Pension plan is an ideal investment for the small business owner and particularly the self-employed.

Contributions to the plan are tax-deductible, and earnings are tax-deferred, so funds will accumulate more quickly. If you're self-employed, contributions for yourself are generally limited to 20% of your net income with an annual compensation limit of $350,000 for 2025.  As an employer, you can also make contributions for each  of your eligible employees in any percentage you choose up to 25% of their total compensation or $70,000 for the 2025 tax year, whichever is less.
 

You also remain in complete control over when and how much of a contribution you make. Employees cannot contribute to the plan, and employers are not required to make a contribution every year. You can make a contribution in years when profits are up, and skip years that are leaner. SEP plans are easy to establish and can be opened with as little as $50.