SEP IRA
Less admin, more flexibility. As the business owner, you can fund the account with tax-deductible contributions based on you and your employees' needs.
Who is eligible for a SEP IRA?
Many types of businesses can establish a SEP IRA plan, but it's best suited for self-employed individuals and small businesses with no employees or many employees. With these plans, small business owners can contribute toward their employees' retirement, as well as their own retirement savings.
What are the benefits of a SEP IRA?
Every Schwab account comes with one-on-one investment help and guidance. With this account, employers also get:
- Tax-deductible contributions that vest immediately
- Tax-deferred earnings
- Flexible annual contributions
- High contributions for business owners
- A way to contribute to eligible employees' accounts
- 24/7 service and support
What are the tax implications of a SEP IRA?
Employer contributions are tax deductible. Contributions and earnings grow tax-deferred and are not taxed until they are withdrawn.
What are the pricing details for a SEP IRA account?
There is no fee to open or maintain an account at Schwab.
● Minimum opening deposit: $0.
● $0 account open or maintenance fees. Other account fees, fund expenses, and brokerage commissions may apply.1
Find out more about our fees and minimums.
Ready to get started?
Follow these steps to build, manage, and make contributions to your retirement plan.
Establish your SEP IRA as an employer.
Here are all the documents you'll need to set up your plan depending on if you have no employees or many employees.
Employers with employees can open a plan by mail using these forms:
Complete & return to Schwab
Documents for your records
Employers with no employees can open their plan by mail or online:
To enroll by mail, complete the forms listed above and return them to Schwab.
To enroll online, upload your completed and signed Employer's Agreement and Adoption Agreement.
Enroll employees (if any).
Download, print, and distribute the following documents to each eligible employee.
Complete & return to Schwab
Documents for you & your employees
Start making contributions.
You have two options for making online contributions. You may set up Direct Deposit from your bank account into each SEP account you wish to contribute to. Or if you do not have employees, you can contribute to your account online by transferring funds from your Schwab brokerage account into your SEP IRA (login required). Contributions for employees can't be made by transferring from your personal account.
Complete & return to Schwab
Common questions
If you have a specific question that's not answered here, please call us at 800-435-4000.
Employers may contribute up to 25% of each eligible employee's income, but no more than $69,000 per person for 2024 (or $66,000 if the contribution is for 2023).
The business owner has complete flexibility in contributions, as long as each employee (including the owner) receiving a contribution meets the plan eligibility requirements in the Adoption Agreement. Employers can change the percentage contributed every year, skip years entirely, and even contribute one year and then never again. Use our Contribution and Eligibility Calculator to model contributions to both business owners and employees, if applicable.
You can also use the Contribution Transmittal Form to record contributions to your participant accounts, including the business owner's.
Rollover or transfer rules for a SEP IRA plan are the same as traditional IRA plans. That means you can roll over funds to a traditional IRA or any qualified retirement plan, such as a 401(k).
A SEP IRA can be opened and contributions made until the employer's actual tax-filing deadline, including any extensions.
A SEP IRA is funded with employer contributions only. It does not need to be funded annually, but if you have employees and contribute for yourself, you must contribute for all eligible employees, including those who have terminated employment during the year. Full vesting is immediate.
Employee eligibility—special information for business owners with employees:
- Each employee must be included in the plan if they are an individual (including the employer) who:
- Has reached age 21
- Has worked a minimum of three of the previous five years
- And earned at least $750 in the year they are making the contribution for (either 2023 or 2024)
- An employer can also exclude union employees subject to a collective bargaining agreement, as well as non-resident aliens.
- An employer can use less restrictive participation requirements than those listed above but not more restrictive ones. The employer must also meet all the eligibility requirements listed in the SEP Adoption Agreement.
Use our Contribution and Eligibility Calculator to model which employees may be eligible, as well as contributions to both business owner(s) and employees, if applicable.
Plans must be established by the tax filing deadline of the business (generally April 15, plus extensions) in order to contribute for that tax year. This is also the deadline for annual contributions.
SEP IRAs are easy to set up and maintain, and no tax filing is required. Schwab reports all contributions and end-of-year fair market value on Form 5498 by May 31 each year.
You can start making penalty-free withdrawals from your SEP IRA plan after age 59½. If you do not start Required Minimum Distribution (RMD) withdrawals by age 73, you may be subject to pay a penalty.
The new SECURE 2.0 reduces the 50% penalty for missing an RMD effective for RMDs in 2023; it does not impact missed RMDs in 2022. Under SECURE 2.0, if you don't take your RMD by the IRS deadline, a 25% excise tax on insufficient or late RMD withdrawals applies. If the RMD is corrected timely, the penalty can be reduced down to 10%. Follow the IRS guidelines and consult your tax advisor.
There are certain exceptions for which you can withdraw funds before age 59½ without taking a 10% penalty, including a rollover to another IRA, some higher education expenses, qualified first-time home purchase expenses, death, disability, and certain medical expenses; however, income taxes may still be due.