Retirement plans
Retirement plans

SEP IRA

A flexible plan for self-employed individuals and small business owners.

Overview

A SEP IRA is an inexpensive and easy-to-manage retirement solution. This employer-funded plan has high contribution levels and is available to any size business. Choose this plan to help you and your employees get more out of retirement.

Ideal plan sponsor

Any business size and type are ideal.

Plan establishment deadline

Set up a SEP plan as late as the tax filing deadline (including extensions) of the employer's income tax return for that year.

Administrative costs

  • The plan participant pays an annual retirement account maintenance fee of $25 for balances under $50,000. The fee is waived for balances of $50,000 and over.1

SEP IRA plan features

With a higher contribution level and more flexibility, the SEP IRA might be the retirement plan for business owners with employees:

The employer must meet the same eligibility requirements as the employees. The employer is only required to contribute for employees who:

  • Are 21 years old or older.
  • Have been employed by the employer for three of the last five years.
  • Earned at least $650 (may be adjusted annually for inflation) for the current year.

The employer makes contributions directly to the IRA account of each eligible employee:

  • The overall maximum contribution per eligible employee is the lesser of 25% of compensation or $61,000, based on the first $305,000 of compensation (for 2022 and indexed for inflation).
  • The employer decides each year how much is contributed, if at all. Contributions made to participant accounts are nondiscriminatory as the same percentage is allocated to eligible participants’ accounts.
  • Employer contributions must be made by the employer’s tax filing deadline (including extensions).
  • Employees are not eligible to make salary deferral contributions.

Participant SEP IRA accounts are subject to the rules that govern regular IRA withdrawals and distributions.

Penalty-free rollovers are permitted in and out of the plan.

  • Testing requirements: A top-heavy test must be performed to determine if the plan disproportionately benefits certain key employees. If the plan is top-heavy, the employer may have to contribute as much as 3% of annual compensation on behalf of all eligible workers who are not considered key employees.
  • Filing requirements: SEP IRAs don’t require government filing, and there is no annual IRS reporting.

Invesco’s competitive edge

As a leading independent global investment management firm, investors benefit from our commitment to investment excellence, depth of investment capabilities, and organizational strength:

  • Maximize your retirement by working with your financial professional to create an asset allocation that aligns with your investment and risk objectives.
  • Explore our mutual fund offerings, which span every major asset class, including US and international equity and fixed income portfolios and target-risk funds.
  • Invest in share classes A, C, and R. 

Work with your financial professional

Optimize your retirement by working with your financial professional to select an asset allocation that aligns with your investment and risk objectives.

Email your advisor

Account access and support

Individual investor access

Manage your individual account online and explore investment insights and market commentary.

Plan sponsor access

Retirement Plan Manager is an online tool that allows sponsors to submit and fund payroll contributions and generate reports.

Live support

Speak with a Client Services representative for account assistance, Monday through Friday, from 7:00 a.m. to 6 p.m. CT.

Call us at 800 959 4246

Automated investor support

Obtain fund share price, check account balance, and make account transactions 24 hours a day, seven days a week.

Call us at 800 245 5463

Key information about SEP IRAs

A Simplified Employee Pension (SEP) is a retirement plan the employer establishes and makes contributions on its employees’ behalf. With this type of retirement plan, the employer must contribute equally for all eligible employees into their individual retirement account (IRA).

A key difference between an IRA and a SEP IRA is who contributes to the account. A traditional IRA is funded by contributions made by the IRA owner and doesn't allow the employer to make contributions. In a SEP IRA, the employer makes discretionary contributions and deposits those employer contributions on behalf of eligible employees. A SEP IRA can also accept traditional IRA contributions funded by the employee.

Virtually all types of employers of any size may establish a SEP IRA plan, including sole proprietors, corporations, partnerships, tax-exempt organizations, and governmental entities.

Yes, the employee can contribute to both a SEP IRA and a Roth IRA. A SEP IRA can also accept traditional IRA contributions funded by the employee. To make Roth IRA contributions, the employee would need to establish a separate Roth IRA. As a reminder, any contributions made to an IRA (traditional or Roth) must be aggregated to ensure they don’t exceed the maximum IRA contribution limit for the year.

The employee can contribute to a SEP IRA by making traditional IRA contributions without opening a new traditional IRA account. The employee's contributions must be within the annual IRA limits. These contributions in the SEP IRA are separate from the employer contributions. Contributions can be sent via check or ACH.  Please contact Client Services at 800-959-4246 for additional details.

Footnotes

  • 1

    The annual fee is waived across all retirement account types if total assets held by the participant in any retirement or non-retirement accounts held directly at Invesco, excluding 529 plans, are $50,000 or greater on the date that fees are assessed. Fund expenses apply.

  • 2

    Nonresident aliens and employees subject to collective bargaining agreements may be excluded. You may designate less restrictive requirements based on age or service at your discretion.