A SEP IRA is an optional product offering available within the Honest Dollar software. A SEP IRA, or Simplified Employee Pension IRA, is a type of traditional IRA established under a SEP plan adopted by self-employed individuals or business owners for their eligible employees that allows a higher contribution limit than other IRAs.
An individual may only have one SEP IRA with one employer at Honest Dollar at a given time. All contributions are potentially tax deductible by the contributor and grow tax deferred. Once reaching retirement age distributions will be taxed based on current IRS rules.
In the case of employer-sponsored employee accounts, contributions to the SEP are made by the employer. Contribution to all eligible employees is solely at the discretion of the employer and is not required.
In the case of self-employed individuals all the contributions are made by the individual at any point or as many times they would prefer throughout the year.
In both cases, the maximum contributions allowed are set by the IRS.
One of the features of the SEP IRA is the potential tax deductibility of the contribution. This account should be thought of as a long-term investment because there is an early withdrawal penalty for all SEP IRA contributions, unless certain requirements are met.
You can find out more about SEP rules and regulations here: https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs