SEP-IRA

A SEP-IRA is one of the easiest small business retirement plans to set up and maintain. You can make sizable contributions for yourself and any eligible employees. There's little administration, and tax filing isn't required. And you can vary contributions from year to year—or even skip a year.

Overview

  • What are the fees and commissions?

    • $0 account open or maintenance fees. Other account fees, fund expenses, and brokerage commissions may apply1.
    • Account minimum: $0
    • Commissions: $0 per online listed equity trades;2 $0 per Schwab ETF online trade in your Schwab account3
       

    There are no fees to open or maintain your account. Other fees may apply; please see Account Pricing.

  • What do I get with this SEP-IRA?

    Every Schwab account comes with one-on-one investment help and guidance. With this account, you'll also get:

    • Tax-deductible contributions that vest immediately
    • Tax-deferred earnings
    • Flexible annual contributions
    • High contributions for you
    • A way to contribute to qualified employees' accounts
    • Retirement planning tools and resources
    • 24/7 service and support

  • How do I contribute?

    Once you have established your Schwab SEP-IRA plan, you may begin making contributions.

    • If you do not have employees, you can contribute to your account online by transferring funds from your Schwab brokerage account into your SEP-IRA (login required).
    • If you do have employees, you must contribute by mail. Contributions for employees cannot be made online.

    See below for more information.

To learn more about SEP, view here.

Account Pricing

There is no fee to open or maintain an account at Schwab. Our SEP-IRA offers:

  • Minimum opening deposit: $0
  • $0 account open or maintenance fees. Other account fees, fund expenses, and brokerage commissions may apply1.
  • Trade commissions: $0 per online listed equity trades;2 $0 per Schwab ETF online trade in your Schwab account3

Find out more about our fees and minimums.

Related Questions

Have questions about our SEP-IRA? Here are responses to some of the most common questions we hear. If you have a specific question that's not answered here, please call us at 800-435-4000.

To get detailed instructions see Establish Your Plan, or call us at 800-435-4000 if you have questions.

A Simplified Employee Pension Plan (SEP-IRA) is specifically designed for self-employed individuals and small business owners who want to save for retirement without getting involved in complex plan administration. If you are self-employed or have few employees, and if you want flexibility in the amount you contribute annually—particularly if you want to make high contributions—a SEP-IRA might be right for you.

Almost any type of business is eligible to establish a SEP-IRA, from self-employed individuals to multi-person corporations (including sole proprietors, partnerships, S and C corporations, and limited liability companies [LLCs]), tax-exempt organizations, and government agencies.

Employer contributions are tax-deductible. Earnings grow tax-deferred and are not taxed until they are withdrawn.

A SEP-IRA is funded with employer contributions only. It does not need to be funded annually, but if you have employees and contribute for yourself, you must contribute for all eligible employees, including those who have terminated employment during the year. Full vesting is immediate.

You may contribute up to 25% of compensation (20% if you're self-employed4) or $61,000 for tax year 2022 or $66,000 for tax year 2023, whichever is less.

A SEP-IRA can be opened and contributions made until the employer's actual tax-filing deadline, including any extensions.

Plans must be established by the tax-filing deadline of the business (generally April 15, plus extensions) in order to contribute for that tax year. This is also the deadline for annual contributions.

SEP-IRAs are easy to set up and maintain, and no tax filing is required. Schwab reports all contributions and end-of-year fair market value on Form 5498 by May 31 each year.

You can start making penalty-free withdrawals from your account after age 59½. If you do not start Required Minimum Distribution (RMD) withdrawals by age 73, you may be subject to pay a penalty.

The new SECURE 2.0 reduces the 50% penalty for missing an RMD effective for RMDs in 2023, it does not impact missed RMDs in 2022. Under SECURE 2.0 if you don't take your RMD by the IRS deadline, a 25% excise tax on insufficient or late RMD withdrawals applies. If the RMD is corrected timely, the penalty can be reduced down to 10%. Follow the IRS guidelines and consult your tax advisor.

There are certain exceptions for which you can withdraw funds before age 59½ without taking a 10% penalty, including a rollover to another IRA, some higher education expenses, qualified first-time home purchase expenses, death, disability, and certain medical expenses.

SEP-IRA plans (Simplified Employee Pension) are designed to allow small-business owners or the self-employed to make sizable contributions to a retirement plan without filing a tax form. SEP-IRAs require little administration.

Employees can contribute up to 25% of your annual income. If you're self-employed, you can contribute 20% (after subtracting the self-employment tax deduction of your businesses' net profit or equivalent to the employee percentage given).

You can decide what amount to contribute each year, from $0 to the maximum SEP-IRA contribution, 25% of compensation (20% if you're self-employed4) or $61,000 for tax year 2022 or $66,000 for tax year 2023, whichever is less.

Rollover or transfer rules for a SEP-IRA are the same as traditional IRA plans. That means you can roll over funds to any qualified retirement plan, such as a 401(k).

Distributions or withdrawals from a SEP-IRA are penalty-free after age 59½. If you do not start Required Minimum Distributions (RMDs) by age 73, you may be subject to pay a penalty.

The new SECURE 2.0 reduces the 50% penalty for missing an RMD effective for RMDs in 2023, it does not impact missed RMDs in 2022. Under SECURE 2.0 if you don't take your RMD by the IRS deadline, a 25% excise tax on insufficient or late RMD withdrawals applies. If the RMD is corrected timely, the penalty can be reduced down to 10%. Follow the IRS guidelines and consult your tax advisor.

There are certain exceptions for which you can withdraw funds before age 59½ without taking a 10% penalty, including a rollover to another IRA, some higher-education expenses, qualified first-time home purchase expenses, death, disability, and certain medical expenses.

Establish Your Plan

Follow these instructions for establishing and contributing to a SEP-IRA plan. Need help? Call us at 800-435-4000.

  1. Review the basic plan document, which describes and governs your account, and keep it for your records.
  2. Print and complete the adoption agreement. Retain a copy and return the signed original to Schwab.
  3. Print and complete your account application. Retain a copy and return the signed original to Schwab.
  4. Print and complete your employer's agreement. Retain a copy and return the signed original to Schwab.
  5. Read answers to frequently asked questions about the Schwab SEP-IRA.
  6. Optional: Review the benefits, features, and contribution eligibility of the plan.
  7. If you are a single owner sole proprietor, you can setup a SEP plan and open a SEP IRA online. You will be required to upload a signed Employer’s Agreement and Adoption Agreement during account open.

    Not a single owner sole proprietor? You can still open the account by paper application.

What comes next?

After you've done your initial paperwork, here are the next steps.

Download, print, and distribute the following documents to each eligible employee.

1. Provide them with these instructions. Employee Instructions
2. Use this form to provide basic information to employees about the plan (optional). Information Sheet for Employees
3. Use this form to answer employee questions. Employee Q&A
4. Complete this form in accordance with the elections you made on the Schwab SEP-IRA Adoption Agreement. Use the completed original as a master and provide a photocopy to each eligible employee. Employee Summary*
5. Ask each participating employee to fill out an application. Account Application for Employees
6. Distribute the pricing guide to participating employees. Charles Schwab Pricing Guide

Once you have established your Schwab SEP-IRA plan, opened your own SEP-IRA, and opened SEP-IRAs for eligible employees (as applicable), you may begin making contributions.

  • Online: If you do not have employees, you can contribute to your account online by transferring funds from your Schwab brokerage account into your SEP-IRA (login required). Contributions for employees cannot be made online.
  • By mail: Send one check payable to Charles Schwab & Co., Inc., FBO "Your Company Name" along with a letter listing:
    • Each participant's account number (including your own)
    • The exact amount to be deposited per account
    • The plan year for which you are contributing

Be sure your check total matches the total amount of participant contributions. Mail your check and the letter to the nearest Schwab operations center listed below:

Charles Schwab & Co., Inc.
P.O. Box 628291
Orlando, FL 32862-8291

Charles Schwab & Co., Inc.
P.O. Box 982600
El Paso, TX 79998-2600

  • Take the next step.

    Ready to establish a SEP-IRA plan? Get detailed instructions above in Establish Your Plan.

    Or call 800-435-4000.

    See all Schwab accounts.

  • Ready to get started?

    If you are a single owner sole proprietor, you can setup a SEP plan and open a SEP IRA online. You will be required to upload a signed Employer's Agreement and Adoption Agreement during account open.

    Not a single owner sole proprietor? Review the Establish Your Plan section above and follow the directions to open the account by paper application.