SEP IRA
With Fidelity, you have no account fees and no minimums to open an account.1 You'll get exceptional service as well as guidance from our team.
Who is eligible |
Self-employed individuals or small-business owners, primarily those with only a few employees.2 Must be a sole proprietor, a business owner, in a partnership, or earn self-employment income by providing a service. |
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Tax benefits |
Earnings are tax-deferred and contributions are tax-deductible. |
Who contributes |
Funded by employer contributions. |
Contribution
amounts |
Must be made by the employer and can vary each year between 0% and 25% of compensation (maximum $61,000 for 2022 and $66,000 for 2023). Each eligible employee must receive the same percentage. NOTE: Due to the passing of the SECURE Act 2.0, for 2023, contributions made to your employees' SEP IRA or SIMPLE IRA could potentially reduce the amount you can contribute to your Roth IRA. Please consult your tax advisor with questions. |
Withdrawals |
10% early withdrawal penalty may apply for withdrawals taken prior to age 59½ if no exceptions apply. Penalty-free withdrawals for qualifying first-time home purchase and certain college expenses. Required minimum distributions starting at age 73.3 Request a withdrawal |
Investment
options |
A wide range of mutual funds, stocks, bonds, ETFs, and more. |
Fees |
There is no opening cost, closing cost, or annual fee for Fidelity's SEP IRA. $0 commission for online US stock, ETF, and options trades.*† |
Administrative
responsibilities |
Employee notification of employer's contribution. Employers must fill out and retain Form 5305 SEP (PDF) in their records. No plan tax filings with IRS. Each employee must open an individual SEP IRA account. As an example, for a sole proprietor April 15 would typically be the deadline to establish and fund a SEP for the prior tax year. If an extension was filed a sole proprietor can establish and fund a SEP IRA by October 15. For more information please see Maintaining your plan. |
Deadlines |
SEP IRAs must be established and funded by your tax filing deadline plus applicable extensions. |
How to make
contributions |
You may deposit checks by mail, through mobile deposit, online via a Bill pay service, via EFT, or call us for assistance. Always be sure to include your account number with your contributions. Learn more |
Maintaining your SEP IRA plan
The list below of your responsibilities as a retirement plan sponsor does not necessarily cover all of your responsibilities. You may want to consult the IRS or a qualified tax advisor if you have additional questions.
Employer responsibilities
1. Establish your plan
- To establish your plan, you as the employer must fill out and retain Form 5305 SEP (PDF) by your business' tax filing deadline (including extensions, if filed). Each employee eligible for participation must open a SEP IRA account.
Note: SEP IRA accounts are in the name of the participating employee only. Neither the company's name nor tax ID appear on the account. If you're the employer, you must obtain the account number and institution where the account is held from your employee to contribute on their behalf.
2. Notify employees of employer contributions and contribute to the account(s)
- The deadline to contribute to your participants' accounts is your business' tax filing deadline plus extensions.
- Contributions must be made by the employer and can vary each year between 0% and 25% of compensation (maximum $61,000 for 2022 and $66,000 for 2023). Each eligible employee must receive the same percentage.
- If your business is unincorporated and you need help calculating you may use this SEP IRA Contribution Worksheet (PDF).
- Funding for the company contribution should be done by the company only. To fund from a company account, you may send a check using this deposit slip (PDF).
- If you choose to contribute from your personal account, you may set up electronic funding online or use our app for a mobile deposit. This may not be appropriate for a company contribution, please see your tax advisor with questions.
3. Abide by your SEP IRA's governing documents
Your plan's governing documents include: IRS form 5305-SEP and the Fidelity IRA Custodial Agreement and Disclosure Statements.
Note: It's important to read the 5305-SEP; this is the IRS document that contains the rules for your plan. While there's typically no special tax filing for the SEP IRA, the 5305-SEP states that there are certain steps the employer must take to qualify for relief from the annual 5500 filing. The 5305-SEP covers what you need to know about your eligibility to offer this plan, the eligibility of employees, contribution limits, and more.
4. Update your plan document
If you change your plan from year-to-year, you'll need to fill out a new 5305-SEP form and retain it in your files along with all previous versions. If you are audited the IRS may ask you for your current contribution agreement and all previous versions.
5. Correct errors of operation
- If an error is made operating your plan, it's your responsibility as the employer to make necessary corrections. You may wish to review the SEP IRA fix-it Guide from the IRS and/or consult a tax advisor.
- One of the most common errors is over contributing to an employee's SEP IRA. A good practice is to double check all contributions before making them. Over contributing can be hard to correct, costly and difficult to properly report to the IRS. If you find that you've over contributed and need to remove funds from the account(s), please fill out the SEP IRA Return of Excess Contribution Request form (PDF) and return it to Fidelity for processing. Note: Funds must be in cash to be distributed.
Helpful resources:
1. SEP IRA Return of Excess Contribution Request (PDF)
2. IRS 10990-R and 5498 Instructions (PDF)
3. What We Offer
4. IRS SEP IRA
5. IRS SEP IRA fix-it guide
6. Employee Plans Compliance Resolution System (EPCRS)
7. IRS SEP IRA FAQs
8. Retirement plans for small business (PDF)
9. Small Business Retirement Plan Contribution Calculator
Ready to get started?
You can start opening your SEP IRA
online today.
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