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The SEP IRA accounts is a good choice for sole proprietorships, LLC’s, partnerships and S and C corporations. Normally there are no complicated forms or reporting to the IRS . The employer is not required to make contributions, and may decide on the percentage and frequency on a yearly basis, perhaps determining the contribution levels based on profitability of the company . Contributions can be put on hold if necessary, providing  a benefit if economic conditions impact the company. All contributions to SEP IRA accounts are tax-deductible and the business does not pay taxes on the earnings on the investments. Frequently employers decide on a mutual fund firm to be the administrator for the account . The individual employees can then determine their own investments from the allowed products . The SEP IRA accounts can be transferred into a different employer’s qualified retirement account if there is a job change, and the portability feature also allows the SEP IRA accounts to be rolled over into another IRA. Under the plan, an employee is considered as someone who works for the business , the employer-owner, or a self-employed individual who has earned income. A qualified employee must be at least 21 years of age , have worked for the business for three of the past five years, and received compensation of $550 minimum . There is a requirement in the plan to provide uniform benefit to all eligible employees. Like several other kinds of individual retirement accounts, distributions from SEP IRA accounts are able to begin as soon as age 59 ½, but earlier disbursements will carry a 10% IRS penalty tax as well as regular income tax. When the account owner reaches age 70 ½ mandatory withdrawals are required to start . SEP IRA accounts offer numerous advantages, including the fact that the money is fully vested on contribution.  Small businesses and the self-employed appreciate the many features of SEP IRA accounts which are flexible, portable, and a smart way to save and prepare for retirement.

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