A Simplified Employee Pension IRA (SEP IRA) is similar to a Traditional IRA, but is specifically designed for small business owners or self-employed individuals.
Aside from the higher contribution limit, SEP-IRAs are generally subject to the same rules governing Traditional IRAs and are inexpensive for employers to offer — there is virtually no administration and the cost is minimal.
The employer is the sole contributor and may contribute, on the employee's behalf, up to 25% of the employee's compensation or $53,000 (for 2015), whichever is less.
Contributions to a SEP IRA are generally 100% tax deductible and investment earnings in a SEP IRA grow taxed deferred. Withdrawals after age 59 1/2 are taxed as ordinary income. Withdrawals prior to age 59 1/2 may incur a 10% IRS penalty as well as income taxes.
Call 1-800-DREYFUS to learn more about how a SEP IRA can help you build your retirement savings.
This does not constitute tax advice. Consult your tax advisor. There are fees, expenses, taxes and penalties associated with SEP-IRAs.
Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.