Employer-funded retirement account structure often used by self-employed workers and small businesses because it is simpler than many workplace plans.
A SEP IRA is a Simplified Employee Pension arrangement that uses IRA accounts to hold employer retirement contributions for owners or employees.
It is widely used by self-employed workers and small businesses that want retirement-plan tax advantages without the heavier administration of more complex plans.
The tax code reference behind the structure is IRC Section 408(k), so legacy material may still refer to a SEP IRA as a 408(k) plan.
SEP IRAs matter because they combine retirement-tax advantages with operational simplicity.
employer contributions are generally deductible
assets grow on a tax-deferred basis inside the account
setup and maintenance are usually lighter than for many other employer plans
That tradeoff makes the SEP IRA a practical middle ground between no plan at all and a more complicated small-business retirement program.
IRA: The account wrapper underlying the SEP structure.
SIMPLE IRA: Another small-employer retirement arrangement with different contribution mechanics.
401(k) Plan: Common comparison point for employer retirement plans.
Traditional IRA: Shares the tax-deferred IRA foundation.