A Guide to the Best SEP IRA Providers of 2018• Benzinga

A Guide to the Best SEP IRA Providers of 2018• Benzinga


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A simplified employee pension (SEP) IRA is a retirement savings account specifically designed for self-employed individuals. SEP IRAs allow entrepreneurs and independent contractors to contribute more to their retirement savings and open accounts for employees.

Small business owners often choose SEP IRAs for themselves and their employees because they can save for retirement tax-free and with significantly higher minimums than the supplementary traditional or Roth IRA.

Quick Look: The Best SEP IRA Providers

  1. Vanguard
  2. Betterment
  3. E-Trade
  4. Fidelity
  5. TD Ameritrade

Three benefits: SEP IRA over a traditional or Roth IRA

1. Higher Contribution Limits

The draw to the SEP IRA over the traditional or Roth IRA is an increased contribution limit. When you open a standard IRA, you’re limited to $5,500 in contributions annually if you’re under the age of 50 and $6,500 if you’re over 50. SEP IRA contribution limits max out at $56,000 annually or 25% of taxable income each year.

You must be at least 21 years old to open a SEP IRA and if you have full-time employees, you’ll be required to make proportional contributions to their retirement accounts as well.  

2. Tax Advantages

Though some employers worry about opening a SEP IRA because they know that they’ll be required to make contributions to their employees’ retirement accounts, it’s tax-deductible for employers.

Like a traditional IRA, contributions are not taxed when deposited into an account but are taxed when they are withdrawn. Special circumstances also allow businesses to defer or skip contributions when sales are down.

3. Ease of Opening

Like a traditional or Roth IRA, a SEP IRA can be opened quickly from home with the assistance of a major broker or banking institution.

What to Look for in a SEP IRA Provider

Easy Setup

SEP IRAs should not be more complicated to open than a traditional retirement account. The best SEP IRA providers offer streamlined, digitized processes, allowing small business owners and contractors the opportunity to open an account without leaving home.

Low Fees and Expense Ratios

With mandatory employee contributions for each full-time worker, be especially careful to monitor deposit and withdrawal fees, fund expense ratios and account maintenance expenses to ensure that you aren’t losing any more money than necessary.

The best SEP IRA providers clearly lay out an easy-to-understand schedule of fees and expenses and offer lowered costs to those who hold larger value accounts.

A Diverse Range of Investment Options

Mutual funds, ETFs, bonds, oh my! The best SEP IRA providers provide a range of investment choices. How much you should save and where you should hold your money varies widely depending on age, income level and the number of dependents you support.

Customer Service Options

The best SEP IRA providers offer extended customer service hours, web and live chat support and a responsive customer assistance team to make retirement planning easier for busy contractors and entrepreneurs.

The best SEP IRA providers of 2019

1. Vanguard