Simplified Employee Pension (SEP IRA)

For small businesses, including self-employed individuals, a SEP IRA offers a straightforward, easy to set up retirement plan with several advantages, such as:

  • Tax-deductible contributions
  • Tax-deferred earnings on investments
  • Higher contribution limits than a Traditional IRA
  • Flexible annual contribution requirements

Individuals that are eligible to establish a SEP and have eligible employees to establish SEP IRAs include:

  • Sole proprietors
  • Business owners in a partnership
  • Individuals earning self-employment income


  • All SEP IRA contributions must be made by the employer. These contributions can be made up to the business tax filing deadline each year, including extensions.
  • Contributions can vary each year. In 2017, employers can contribute between 0% - 25% of eligible compensation up to $54,000, whichever is lesser. There is a $270,000 compensation cap per employee.
  • The employer must contribute the same percentage to all eligible employees.


  • If you are over the age of 59½, all withdrawals are allowed without penalty, but will be subject to normal income taxes.
  • Any withdrawals made by the SEP owner while under the age of 59½, will be subject to a 10% penalty in addition to federal and state income taxes. Certain exceptions to the penalty fee apply including death, disability and first-time home purchases.
  • You must take minimum required distributions starting at age 70½.

A variety of investment options are available for your Traditional IRA including:

  • First Citizens Bank1
    • FDIC insured CDs
    • FDIC insured money market accounts
  • First Citizens Investor Services2
    • Mutual funds
    • Stocks
    • Bonds
    • Annuities
    • Exchange Traded Funds (ETFs)
  • First Citizens Wealth Management2
    • Customized Asset Management Solution

A First Citizens Client Advisor will be happy to discuss options to create an investment strategy that will help you align your retirement savings goals.