The SEP IRA or the Simplified Employee Pension Individual Retirement Account in particular, is simply an alternative to the traditional Individual Retirement Account. Under this scheme, employers or self employed people can contribute to an Individual Retirement Account or Annuity which is set up for each employee or themselves respectively. Retirement is a time in our lives that worries the most of us. The question in our minds is that with the absence of a regular income, will we be able to maintain the standard of living that we are used to? Well, the key to the much needed peace of mind is a good retirement plan, like a SEP or the Simplified Employee Pension Plan.

Contributions to the SEP-IRA are considered to be a profit-sharing plan. An employer can contribute up to 25% of the employee’s wages to their SEP-IRA account. A self employed person can contribute 20% income before tax deduction with a maximum limit of $46,000.

Not only are SEP-IRAs, extremely easy to implement as a retirement savings plan, their tax benefits are a boon as well. These accounts are treated as traditional IRAs, and its funds can be treated in a similar manner. Any contributions are tax deductible and so all transactions and earnings within the IRA do not have any impact on taxation. Of course, once you start withdrawing from this fund, post retirement, they will be taxed as income. The exception being parts of the withdrawal that correspond to contributions not deducted. The ease of operation is compounded by the fact that EP-IRAs do not require an annual IRS filing. Even the paperwork necessary to establish a SEP-IRA is minimal.

In all respects, and especially compared to the more popular 401(k) plan, higher contribution limits and simplicity of operation make this a superior plan for stress free retirement.