What is the limit on investing in a SEP account?
A simplified employee pension (SEP) plan is a special type of individual retirement account (IRA) that is extremely popular among owners of small businesses and sole proprietors. If you are the owner of an incorporated business, you may contribute up to 15 percent of the salary you pay yourself. Remember that if you establish an SEP plan for yourself, you must offer a similar plan to your workers – and fund their plans with contributions of your own. For example, if you contribute 10 percent of your salary to your own plan, you must also contribute 10 percent of each worker s salary to his individual plan. If you operate as a sole-proprietor, your maximum contribution percentage is 13.04% for yourself when the overall plan contribution is 15% for your workers.
