Self-Directed SEP IRA

Self-Directed SEP (Simplified Employee Pension)

Designed for self-employed individuals and small business owners (typically with up to 25 employees), the SEP IRA enables individuals who are business owners to make contributions toward their own retirement without getting involved in a more complex plan.

The SEP allows an annual contribution of up to $69,000 in 2024. Contributions to a SEP are tax-deductible, and earnings within the account are tax-free until withdrawn.

An employer may contribute up to 25 percent of each employee’s annual compensation (the maximum considered compensation is $345,000 for 2024).

Learn more about SEP IRA contribution limits

SEP Eligibility

Any employer—whether a corporation, partnership, or self-employed individual—may establish the plan, even if there is only one employee.

Employees must meet ALL of the following requirements:

• Be at least 21 years of age;
• Have worked for the business during any three of the past five years; and
• Have earned the $750 annual minimum required compensation.

Spouses and children may also participate in the plan and open their own SEP IRAs—as long as they are employees of the company and meet the income requirements.

What Makes a SEP IRA Self-Directed?

When a SEP IRA is referred to as a self-directed account, it simply means you can use the account to invest in areas outside of traditional stocks and bonds. That’s the primary difference between a self-directed and traditional retirement account — where you put those investment dollars.

With a self-directed IRA or 401(k), you can invest in a variety of areas, including:

• Real estate
• Private debt like corporate debt offerings, notes secured by deeds of trust or mortgages
• Private equity-like stock of C-corporations, limited partnerships, LLCs and REITs
• Precious metals, including gold, silver, platinum, and palladium
• Cryptocurrency like Bitcoin