What is a SEP?
It stands for Simplified Employee Pension Plan.
It's a retirement plan that allows small employers a relatively simple alternative to a qualified retirement plan. The employer adopts the plan and makes the contributions to a Traditional IRA for each of the eligible employees. The owner of the business is also considered an employee who is eligible to receive a SEP contribution.
The employee designates the Traditional IRA to receive the employer contribution. The contributions are based on the compensation earned for the year of all the eligible employees.
Just like our Traditional IRAs, all SEP Plan funds are safe and insured up to $250,000 by the FDIC.