Contribute to Retirement Savings with a SEP IRA

Small businesses can help workers increase their retirement savings by contributing a percentage of the employees’ earned income to a Simplified Employee Pension (SEP). Employers offering SEPs cannot provide other retirement plans, except another SEP. The SEP – unlike the SIMPLE IRA – does not allow employee contributions, but an option exists for eligible workers also to contribute to Individual Retirement Annuities (IRAs).

Why SEPs are Beneficial

For Employers:

  • Simple to maintain, with limited recordkeeping
  • Low cost
  • Useful for attracting and retaining employees

For Employees:

  • Immediate 100-percent vesting
  • Employee ownership of the SEP, which is entirely funded by the employer
  • Earnings are tax-deferred until withdrawal1 (usually at retirement)

Self-Employed Contributions

An SEP option exists for self-employed individuals and allows contribution amounts based on how the business is set up:

  • Self-employed individuals with incorporated businesses can contribute up to 25 percent of his or her W-2 income, up to the IRS limit.
  • Contributions for sole proprietors are based on 20 percent of adjusted earned income.

Contact your local WoodmenLife Representative for more information about SEP IRAs.

1. WoodmenLife surrender charges may apply to withdrawals of contributions and earnings.
ICC10 87 4-10, 87 4-10 (XX), O-87 4-10 (XX)


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