A simplified employee pension IRA (SEP IRA) is a type of IRA that is designed for small business owners. SEP IRAs and traditional IRAs are very similar. However, the main differences are who can contribute and how much can be contributed. Also, whereas a traditional IRA can be opened by anyone, only an employer can open a SEP IRA for themselves and their employees. Additionally, only the employer can contribute to a SEP IRA.

SEP IRAs allow you to contribute more money as compared to traditional IRAs. Your SEP IRA contribution does not count towards the annual traditional or Roth contribution limits, so you are able to contribute the maximum into a traditional IRA as well.

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