Individual Investor
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SEP-IRA

About SEP-IRAs
A Simplified Employee Pension IRA (SEP-IRA) is a tax-advantaged retirement plan that allows employers to make contributions to their own and their employees' accounts. Contributions to a SEP-IRA are tax deductible for the business, and earnings grow tax-deferred.

Advantages
A SEP-IRA provides the benefits of a company-sponsored retirement program without the administrative expenses, government reporting requirements, and complexity associated with many other types of retirement plans. These plans are designed for:

  • Self-employed individuals
  • Sole proprietors
  • Independent contractors
  • Partnerships
  • Small corporations, including S corporations

Employees are not allowed to make contributions to a SEP-IRA. Employers may contribute up to 25% of compensation each year to each eligible employee's account. While employer contributions are not required, business owners who make contributions to their own accounts must make contributions of the same percentage of income to each eligible employee's account.

2017 contribution limits
As a small-business owner, you can contribute up to 25% of your compensation or $54,000, whichever is less. If you have employees, you may be required to contribute for them as well.

Tax-deductible contributions
As a small-business owner, you can deduct your contributions for yourself and your employees from your company's federal taxable income.

 

Taking distributions
Employees may begin to take distributions from the plan as early as age 59½ and must begin taking distributions from the plan no later than April 1 following the year in which they reach age 70½. Taxes are payable on distributions when they are withdrawn. In addition, the IRS may impose a 10% penalty on any distribution taken before the employee reaches age 59½, unless certain exceptions apply. Those exceptions include:

  • Medical expenses in excess of 7.5% of adjusted gross income
  • Health insurance premium payments if unemployed for 12 consecutive weeks
  • Qualifying higher education expenses
  • Qualifying first-time home purchase ($10,000 lifetime limit)
  • Substantially equal payments made over life expectancy
  • Qualified military reservist
  • Death
  • Disability
 

Phone

For assistance with an existing account or plan, call us at 1-800-359-3379.

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If you wish to establish a new plan using our mutual funds, please work with your financial advisor or visit the small-business center on wellsfargo.com. In addition to SIMPLE IRAs and SEP-IRAs, you can learn more about other small-business retirement solutions.

Any tax or legal information on this website is merely a summary of our understanding and interpretations of some of the current income tax regulations and is not exhaustive. Investors should consult their tax advisor or legal counsel for advice and information concerning their particular situation. Wells Fargo Funds Management, LLC; Wells Fargo Funds Distributor, LLC; or any of their representatives may not give legal or tax advice.

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