SEP and SIMPLE IRA Plans for the Self-Employed

SEP IRA (Simplified Employee Pension):

• Intended for self-employed individuals and small business owners.
• Higher contribution limits compared to Traditional and Roth IRAs.
• Contributions are employer-only and are tax-deductible.

SIMPLE IRA (Savings Incentive Match Plan for Employees):

• Aimed at small businesses with 100 or fewer employees.
• Offers both employer and employee contributions.
• Employers are required to contribute either a matching contribution up to 3% of compensation or a 2% non-elective contribution for each eligible employee.

Both SEP and SIMPLE IRAs allow self-employed individuals and business owners to create retirement plans for themselves and their employees, combining tax benefits with flexibility in contributions.

IRA Contribution Guidelines

When planning for retirement, understanding IRA contribution rules is crucial. They specifically address how much an individual can contribute each year and the tax implications involved.