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Whats the difference between a SEP IRA and a Traditional IRA?

April 26, 2017IRA SEP Traditional IRA

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Whats the difference between a SEP IRA and a Traditional IRA?

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Once an employer makes a contribution to a SEP IRA for an employee, the funds belong to the employee (employees are immediately 100 percent vested in their SEP IRA funds) and are subject to Traditional IRA rules. Each employee directs his or her own investments. Only businesses (employers) can contribute to SEP IRAs. In contrast, only individuals can contribute to Traditional IRAs.