Self Directed SEP IRA vs. a Traditional SEP IRA
Who Can Establish a traditional SEP IRA? SEPs can be established by any type of business entity, including a sole proprietorship and independent contractors. SEPs are a great opportunity for the self-employed. What is a SEP IRA? Known as a SEP or SEP IRA, a Simplified Employee Plan is a retirement plan established by an employer, a sole proprietor, or an independent contractor. A SEP permits the self-employed or employers to make deductible contributions. These contributions are made to a Traditional IRA. Contributions to a SEP in any given year can be made up to 25% of earned income (with certain dollar limits).
What is a Self-Directed SEP IRA? You can transfer all or part of your account to a self-directed SEP IRA. This combines the higher contribution benefit of the SEP with individual control. With a self-directed retirement account – you decide how to invest. When should a Self-Directed SEP IRA be considered? If You Are Self Employed as an independent contractor or sole proprietor, or are part of a partnership, C-corp or S-corp. If You Want Greater Investment Choices and you are unsatisfied with the returns offered by your current retirement account.
With a self directed SEP IRA, you won’t be restricted to mainstream investments like mutual funds, stocks and bonds. You can have a wider choice of investment options including real estate, mortgages, tax liens, notes, precious metals and more. If Your Business Income Fluctuates and you don’t want to be locked into making contributions annually to an employer-sponsored plan. Low administrative costs and easy set-up are two major advantages of an self directed SEP IRA over other qualified plans. If You Want To Reduce The Tax Withheld From Your Paycheck. Contributions to your SEP account are not subject to FICA or other tax withholdings (does not apply to self-employed individuals). If You Want Tax Benefits. All SEP contributions are deductible for employers. If You Want To Shelter Interest Earnings. Interest earned in an IRA is not taxed until withdrawn (generally upon retirement). – See more HERE.
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