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Simplified Employee Pension Plans

Put retirement within reach with an SEP IRA

A Simplified Employee Pension (SEP) from SMCU is a great way for self-employed people or small business owners to save for life after work - and to help employees do the same. Contributions are made to an Individual Retirement Account, or IRA, which is why these accounts are labeled SEP IRAs.

SEP IRA basics

  • Who can use SEP IRAs: any sole proprietor, freelancer, or business owner with one or more employees.
  • Contributions: are tax-deductible and go into a Traditional IRA under the employee's name*
  • Employees: do not contribute; instead, all contributions are made by the employer
  • At withdrawal: the money is taxed (like a Traditional IRA)
  • Eligibility criteria: employee must be at least 21 years old, have worked for the company during three of the past five years, and received the eligible compensation amount from your business for the year (see for rules and regulations)

Is a SEP IRA right for me?

As with any retirement account, your best bet is to learn more from a trusted professional at San Mateo Credit Union, a tax professional, or an attorney. But, in general, many sole proprietors and freelancers find SEP IRAs very helpful. You can put away up to 25 percent of your net income, up to a yearly limit set by the IRS (for 2023, the limit is $66,000). So true to their name, these accounts do simplify the savings process.

Please give us a call at (650) 363-1725 or stop by a branch to talk through your options for retirement savings.

* SMCU does not provide tax advice. Please consult with your tax or legal advisor to determine how this information may impact your own situation. The information on this site should not be relied upon as investment advice or solicitation. Statements of fact are considered reliable but no representation or warranty is made as to their completeness or accuracy.

Regular and IRA Certificates offer a great combination of stability and higher rates.

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