SEP-IRA:
The High-Limit Shield

A heavy-hitter for your retirement.

Think of the SEP-IRA as the heavy-hitter of retirement accounts for the self-employed. It's §408(k) in the tax code, and it's built for speed and scale. A Simplified Employee Pension (SEP) IRA allows you to contribute a massive portion of your income into a tax-deferred account, far beyond what a traditional IRA allows.

Unlike traditional IRAs with low annual limits, the SEP-IRA is designed for high-earning business owners who want to aggressively reduce their taxable income while building long-term wealth.

Contribution Limits (2024-2026)

Deadlines & Flexibility

One of the greatest advantages of the SEP-IRA is its flexibility. You do not have to contribute every year, and you can decide the amount at the last minute.

• Filing Deadline: You can contribute up until your tax filing date, including extensions.
• S-Corp Deadline: If you file an extension, you have until Sept 15 to fund the account for the previous year.
• Easy Setup: Can be opened at almost any major brokerage in minutes.

How to Open and Fund

1. Choose a brokerage (Fidelity, Schwab, Vanguard, etc.).
2. Complete the SEP-IRA adoption agreement (Form 5305-SEP).
3. Calculate your maximum contribution based on your final year-end compensation.
4. Transfer funds from your business account to the SEP-IRA account.
5. Report the deduction on your business tax return (Form 1120-S or Schedule C).

SEP-IRA vs. Solo 401(k)

While SEP-IRAs are easier to set up, Solo 401(k)s often allow for higher contributions at lower income levels because of the "employee" deferral component. However, the SEP-IRA remains the king of simplicity for late-year tax planning.