What is a Sep IRA?
A Sep IRA stands for simplified employee pension plan which allows an employer to have a simplified way to contribute to an employee’s retirement plan. It also allows them to contribute to their own retirement savings.
Contributions are made to an IRA or Annuity IRA for each employee who participates. This is a SEP IRA.
A SEP IRA account is a Traditional IRA and has the same investment, distributions, and rollover rules as a Traditional IRA.
1. What are the best SEP IRA plans?
As SEP IRAs are considered Traditional IRAs by the IRS. And they have to be set up by your employer the clear answer is a Traditional IRA.
This also means that it will have to same rules in regards to contributions, distributions, and tax related benefits. We discussed these in an earlier post.
Also, any plan that you contribute to is a great plan. The point of all this is to show you the light and help you take action.
2. Can I open a SEP IRA?
If your w2 income comes from that employer then you will need to participate in their retirement plan. If they are small enough they may have a SEP IRA plan for you to participate in.
You also can open up your own Traditional or Roth IRAs as well.