What is a SEP IRA?
A Simplified Employee Pension (SEP) is a tax-advantaged retirement account that can be used by business owners who may not have access to 401(k) plans.
Ellevest’s SEP IRA is designed for single employee sole proprietorships, which means you are the only employee at your company.
While SEP IRAs are available for larger employers as well, we aren’t able to support SEP IRAs for employers with more than one employee at Ellevest at this time.
You can contribute to a SEP for your self-employed business even if you participate in your employer's retirement plan at a second job. Sole proprietors are also able to contribute the annual maximum across other Roth and Traditional IRAs in addition to their SEP IRA. For more on traditional and Roth IRA contribution limits, you can read our FAQ here.
How much can I contribute to a SEP IRA?
For single employee sole proprietorships (meaning you are the only employee at your company), the contribution limits for SEP IRAs vary depending upon business revenues and your salary.
The current annual maximum is the lesser of:
- 25% of your compensation or
- $55,000 in 2018 and $56,000 in 2019
Ellevest and Folio will cap your contributions to your Ellevest SEP IRA at $55,000 for contributions associated with 2018 tax filings and $56,000 for contributions associated with 2019 tax filings, but it is up to you (and your accountant) to determine the specific contribution and deduction limits that apply to you. You can find more details on the IRS website.
How do I withdraw funds from a SEP IRA?
Please note that most early retirement plan distributions are subject to income tax and may be subject to an additional 10% early withdrawal penalty. Due to the potential tax penalties for early withdrawals, the IRA withdrawal process requires a few additional steps. When you withdraw from your SEP IRA with Ellevest Digital/Premium, you will be provided with a form to be filled out and sent to our custodian, Folio. Once Folio receives the form, they require verbal authorization over the phone to liquidate your funds and transfer them to your linked account.
To make a withdrawal from your SEP IRA with Ellevest Digital/Premium, you can contact our Client Experience team at firstname.lastname@example.org.