Compared to other non-employer sponsored savings strategies or retirement accounts, an SEP IRA has a number of benefits:
- Employers can make contributions on behalf of all their employees
- From the moment contributions are placed into the account, employees are 100% vested
- Contributions are kept in a traditional IRA, under the SEP umbrella
- All contributions are tax-deductible for the employer
- Employees can enjoy the tax-advantaged benefits just like regular employees at larger corporations
- Investments still grow tax-deferred till you’re ready to start making withdrawals at retirement
- Withdrawals are taxable, but you should be in a lower tax bracket by then
- You can still make contributions to Roth and Traditional IRAs in addition to the SEP IRA