Small Business Dictionary

Simplified Employee Pension (SEP)

A Simplified Employee Pension (SEP) is a flexible, tax-deductible individual retirement account (IRA) to provide retirement benefits for business owners and all of their employees. Easy to set up and maintain, a SEP is for employees 21 or older who have worked for at least 3 of the previous 5 years for that employer, and received at least $500 in compensation during the tax year. (See this IRS article for more information.)