A Simplified Employee Pension plan allowing employers to contribute up to 25% of each employee\'s compensation, capped at $69,000 for 2024. SEP IRAs are easy to administer and require no annual Form 5500 filing.
Why SEP IRA matters for employers
SEP IRA contributions are entirely employer-funded, tax-deductible, and must be made at the same percentage of compensation for all eligible employees, including the owner. There are no catch-up contributions, and employees cannot make their own deferrals into a SEP IRA. The plan requires no annual IRS filing and can be established as late as the employer's tax return due date including extensions.
SEP IRAs are well-suited for small businesses with few or no employees because the required proportional contributions to all employees make them expensive as headcount grows. Self-employed individuals and sole proprietors frequently use SEP IRAs for their simplicity compared to 401(k) plans.
How BEG handles SEP IRA for clients
BEG Managed Payroll handles SEP IRA as part of a fully managed payroll service at $25-$45 per employee per month. Clients do not need to track compliance rules, filing deadlines, or calculation methods related to SEP IRA on their own. Everything is included. Learn about BEG Managed Payroll.
Frequently asked questions
Do employers have to manage SEP IRA themselves?
No. A managed payroll provider handles SEP IRA as part of full-service payroll. BEG manages this for clients at $25-$45 PEPM with no system migration required.
What happens if SEP IRA is handled incorrectly?
Errors related to SEP IRA can trigger IRS penalties, state agency assessments, or employee disputes. Catching and correcting errors before filing is far less costly than after-the-fact corrections.
How does BEG handle SEP IRA for managed payroll clients?
BEG tracks, calculates, and remits everything related to SEP IRA as part of fully managed payroll. Clients do not need to monitor compliance -- that is included in the service at $25-$45 PEPM.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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