Simplified Employee Pensions, known as SEPs, represent an easy, low cost retirement plan option for employers. Rather than establishing a separate retirement plan, in an SEP the employer makes contributions to his or her own Individual Retirement Account (IRA) and the IRAs of his or her employees. With an SEP retirement plan an employers can make tax deductible contributions to their own and their employees' IRAs. Omit or reduce contributions in years when contributions are unaffordable. Avoid the administrative costs and the reporting requirements of conventional plans.

A SEP can provide a significant source of income at retirement. Contributions to a SEP are tax deductible and your business pays no taxes on the earnings on a SEP's investments. You are not locked into making contributions in future years. You can decide each year whether to pay into the SEP and how much to contribute. Once you put money into a SEP you have no further responsibility for the amounts contributed. The funds are managed by a financial institution.