Different types of employer-sponsored retirement plans are well known commodities. If you work for a privately owned company, there is a good chance you have a 401k. If you work for a hospital or school district, you are probably aware of the 403b available to you. State employees often have 'deferred comp' plans and government employees have 457's.

The high ceilings on contributions allow these investors to put away ample money for their retirement. They also have the option of having an IRA or Roth IRA as a complement to their plan at work. The limit for IRA contributions is much lower than employer sponsored plans: $5,000 per year or $6,000 for those over the age of 50.

So this brings us to the question 'What if I am self employed or work for a company that doesn't offer a plan?' It is unfair to be subject to IRA contribution limits, considering workers in these categories don't have an employer-sponsored investment vehicle to help them save for retirement. That brings us to the SEP. Many people have never heard of it, but if you don't have a plan through your job or are self-employed, it might be a good idea to familiarize yourself with its features. The SEP, which stands for Simplified Employee Pension, is a tax-deductible retirement plan that allows someone who is self-employed to put away the lesser of $49,000 or 25% of his or her income. The account will grow tax-deferred until the participant begins taking distributions during retirement, at which point withdrawals will be treated as taxable income (like with any other tax-deferred plan).

To see if you qualify to open a SEP stop by and talk to us and we will get you headed in the right direction!

Steve Hicks

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).