SEP-IRA: What Does It Mean?

A SEP-IRA (Simplified Employee Pension Individual Retirement Account) is a retirement plan designed for self-employed individuals and small business owners. It works like a traditional IRA but with much higher contribution limits—up to 25% of your compensation or a set annual maximum, whichever is less. Contributions are tax-deductible, and the money grows tax-deferred until withdrawal.

SEP-IRAs are straightforward to set up and maintain, making them an attractive option if you're building your own business and want to invest seriously in your retirement without complicated plan administration.