SEP-IRA
A Simplified Employee Pension IRA allowing self-employed individuals and small business owners to contribute up to 25% of net self-employment income or $69,000 (2024), whichever is less.
Understanding SEP-IRA
SEP-IRAs are popular with self-employed individuals and small business owners because of their high contribution limits and simple administration. However, all distributions are taxed as ordinary income, and RMDs apply. High-earning self-employed individuals who max out a SEP-IRA often use IUL as an additional tax-free accumulation vehicle beyond the SEP limits.
Why This Matters for Retirement: Understanding SEP-IRA is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.