8 Best SEP IRAs + Providers [Places to Open, 2024]

Saving for retirement can feel complicated if you’re self-employed or own a small business because you don’t have access to more traditional employer-sponsored retirement accounts. But it might be easier than you think to build your retirement nest egg.

Spoiler alert: The Simplified Employee Pension Individual Retirement Account (or SEP IRA, if you’re trying to cut down on syllables) could be the solution you’re looking for.

Opening a SEP IRA is one of the best ways for self-employed professionals and small business owners to save for retirement. Not only are these plans easy to set up and administer, but they also offer benefits including higher contribution limits than a traditional or Roth IRA, tax-deductible contributions for employers, and tax-deferred growth.

If you’re a small business owner that’s considering opening a SEP IRA for your retirement savings, here are some of the best SEP IRA providers and accounts available. 

SEP IRAs—Our Top Picks

---

Best SEP IRAs to Open for Your Retirement Savings

1. M1 Finance

---

• Account minimum: None
• Minimum initial deposit: $500
• Fees: No annual or opening fees; $100 closing fee

FinTech company M1 Finance’s SEP IRA, like its other investment accounts, is based around Pies. Your portfolio is represented as a Pie (a pie chart); every stock and ETF you decide to buy becomes a slice of that pie—and because M1 supports fractional shares, you can add virtually any stock or ETF to your portfolio. From there, you set each holding’s “weight”—what percent of your Pie each slice should account for, so, say ETF X will always be 25% of your portfolio, while Stock X should always be just 5%.

After that, whenever you fund your M1 account, it will automatically invest your money based on these targets. You can take the automation even further by setting up recurring deposits into your M1 account.

From there, M1 can automatically rebalance your portfolio for you, or you can go in and manually change how small and large each Pie slice is. If you really want to put it on autopilot, you can invest in M1’s Expert Pies—professionally pre-built portfolios designed for different investment goals. (And if you want something in the middle, you can even combine Expert Pies with your own custom choices.)

M1’s Pies are a great set-it-and-forget-it option. But investors who want more granular control over their retirement portfolios might want to consider a more traditional self-directed SEP IRA instead.

Fees and minimums are a mixed bag here. While M1’s SEP IRA charges no opening or annual account fees, it does have a high $100 closing fee and $100 account transfer fee. You also must make an initial deposit of at least $500 to open a SEP IRA.

Related: 15 Best Investing Research & Stock Analysis Websites

2. SoFi

---

• Account minimum: None
• Minimum initial deposit: None
• Fees: No annual or opening fees; $20 closing fee

SoFi is widely known for keeping fees to a minimum for its customers, and this reputation extends to its SEP IRAs. You won’t pay any opening or annual fees with a SoFi SEP IRA, though a $20 fee will apply if you opt to close your account.

SoFi offers both automated and active account management, so there’s something for both hands-on and hands-off investors alike. Better still, its automated investing product charges no management fees (but you’ll still have to pay fees on any funds you’re invested in).

The SEP IRA offers commission-free stock, ETF, and options trading, and further, SoFi doesn’t charge contract fees for options, either. However, if you want to invest in mutual funds, you’re out of luck—the platform doesn’t offer them.

As a platform: SoFi’s interface is still very much geared toward younger, less experienced investors—everything is focused on simplicity and ease of use, rather than an expanse of sophisticated tools. SoFi also offers budget-friendly features such as fractional shares, which allow you to invest for as little as $1.

Related: 15 Best Stock Research & Analysis Apps, Tools and Sites

3. Betterment

---

• Account minimum: None
• Minimum initial deposit: $10
• Fees: $4/mo. or 0.25% annually

With a SEP IRA from Betterment, you can take advantage of automated investing tools that make managing your account simple.

Betterment provides stock and bond exposure through ETF-only portfolios that vary depending on your risks and interest. For instance, Core is a roughly 60% stock/40% bond portfolio that keeps you invested in most domestic and international securities. Social Impact buys stocks and bonds of companies with “a demonstrated focus on supporting social equity and minority empowerment.” The downside? There is no self-directed option, so if you want to make your own investment choices, you’ll have to look elsewhere.

Investors need to be aware of a few other account details. For one, Betterment charges $4 per month (until you either set up recurring monthly deposits totaling $250 or more, or reach a balance of $20,000 or more across all Betterment accounts, in which case, it charges 0.25% per year) for all investment accounts, not just SEP IRAs. You can also unlock unlimited financial guidance from a Certified Financial Planner™ by upgrading to Premium for an additional 0.15% annually, though that requires a $100,000 minimum balance.

While the fees are relatively small, they do add up over time and detract from your overall returns. But for certain investors, the convenience of pre-built portfolios, automated investing, and automatic tax loss harvesting could be worth the cost.

Also, while Betterment has no required minimum account balance, it does have an ACH deposit minimum of $10. Betterment also requires a minimum $50 account balance for rebalancing in investing portfolios.

Note: Betterment currently only supports SEP IRAs for only one plan participant (thus, only for self-employed individuals or small business owners with no employees).

Related: How to Invest Money: 5 Steps to Start Investing w/Little Money

4. Fidelity Investments

---

• Account minimum: None
• Minimum initial deposit: None
• Fees: No annual, opening, or closing fees

Fidelity offers a SEP IRA plan with no account minimums and extremely minimal fees. While you can expect no opening fees, closing fees, or annual fees with a Fidelity SEP IRA, you might pay mutual fund fees and fees for other managed accounts—however, these are fairly standard costs no matter which provider you choose.

With a Fidelity SEP IRA, you can invest in stocks, exchange-traded funds (ETFs), mutual funds, bonds, certificates of deposit (CDs), and options. Better still, you can buy and sell stocks, ETFs, Fidelity mutual funds, certain non-Fidelity no-transaction-fee mutual funds, U.S. Treasuries, and newly issued bonds without paying any commissions. Fidelity also allows you to invest in stocks and ETFs with as little as $1 via fractional shares.

Contributions can be sent both by recurring checks from your business bank account via a billpay service, and sole proprietors can make automatic contributions from a bank account. Within the account, you can set up automatic investments (made from your cash balance) into mutual funds.

Like with other SEP IRAs, Fidelity’s SEP IRA offering does have a few limitations compared to its other brokerage products. For instance, in my research calls to Fidelity, they explained that SEP IRAs don’t have access to the Fidelity Go robo-advisory service nor Fidelity Managed FidFolios. Fidelity also says its SEP IRAs are limited to Tier 1 options (so, for instance, no spreads or selling stock-secured covered puts), but that’s hardly a major drawback considering this is a workplace retirement account.

In short: Fidelity’s SEP IRA is an inexpensive, highly functional retirement account.

Related: 11 Best Stock Advisor Websites & Services to Seize Alpha 

5. E*Trade

---

• Account minimum: None
• Minimum initial deposit: None
• Fees: No annual, opening, or closing fees

E*Trade offers a no-cost SEP IRA with no significant limitations compared to its traditional and Roth IRAs. You get to invest in one of the widest arrays of assets across the brokerage world—stocks, ETFs, mutual funds, bonds, options, even futures—with no account fees, no opening fees, and no closing fees.

Trading fees are generally low, too. E*Trade offers zero-commission stock, ETF, and options trading. It also has a leg up on some platforms by offering $0-commission mutual fund trading. Options still incur a 50- to 65-cent contract fee, however. Meanwhile, bond trades are $1 apiece, and futures trades are $1.50 per contract per side, plus other fees.

E*Trade’s SEP IRA accounts are also eligible for the brokerage’s automated Core Portfolios service, which charges $1.50 or 0.30% annually and requires a minimum $500 investment.

Related: 17 Best Investment Apps and Platforms [Free + Paid]

6. Merrill Edge

---

• Account minimum: None
• Minimum initial deposit: None
• Fees: No annual or opening fees for accounts opened online; $49.95 closing fee

In addition to its array of investment products and services, Merrill Edge offers a SEP IRA account for small business owners. This account comes with no opening or annual fees, a wide range of investment choices—including stocks, ETFs, mutual funds, bonds, and options—and commission-free trading for stocks, ETFs, and options.

You can also access Merrill’s Guided Investing product through the SEP IRA. With Guided Investing Online, you set your goals online, and Merrill will set up a portfolio that’s monitored and rebalanced by Merrill professionals. Minimum investment is $1,000, and annual fees are 0.45% (assessed monthly, based on the prior month’s balance). Guided Investing Online with a human manager is a more expensive proposition, requiring a $20,000 minimum investment and costing 0.85% annually.

Regardless of whether you have a Self-Directed or Guided Investing account, you will be charged $49.95 to close out the account.

Related: 8 Best Stock Portfolio Tracking Apps [Stock Portfolio Trackers]

7. Charles Schwab

---

• Account minimum: None
• Minimum initial deposit: None
• Fees: No annual, opening, or closing fees

Charles Schwab, by virtue of being one of the largest investment firms in the U.S., can lean on its scale to offer a very low-cost SEP IRA for small business owners.

This account features a variety of investment choices, including stocks, bonds, mutual funds, ETFs, and more. And not only do you get commission-free stock, ETF, and options trades online, you can buy and sell thousands of funds on Schwab’s Mutual Fund OneSource platform at no cost, as well. (Options still charge a 65-cent contract fee, which is typical.) Like with other SEP IRAs, options trading is limited compared to what you can execute with a Schwab brokerage account, but that shouldn’t be much of a concern given the SEP IRA’s use as a retirement account.

The company also offers 24/7 account support, making it a good choice if you want the peace of mind that comes with accessible customer service.

Related: 9 Best Fractional Share Brokerages to Buy Partial Stocks & ETFs

 8. Vanguard Personal Advisor Services

---

• Account minimum: None
• Minimum initial deposit: None
• Fees: Single-participant SEP IRA: $25 annually, or $25 annually for each Vanguard fund in a mutual fund-only account; Multi-participant SEP IRA: $20 annually for each Vanguard mutual fund in each account

Established investment firm Vanguard offers a fairly low-cost SEP IRA for small business owners. If you have no employees, your investment choices with a Vanguard SEP IRA include mutual funds, ETFs, stocks, bonds, and CDs. However, if you’re opening a multi-participant SEP IRA, your investment choices are limited to Vanguard mutual funds alone.

At first blush, Vanguard charges pretty steep fees for its SEP IRAs. Single-participant SEP IRA owners are looking at a $25 account fee, or $25 per Vanguard mutual fund if it’s a mutual fund-only account. It’s not much better for multi-participant SEP IRAs, which pay $20 per Vanguard mutual fund in each account. However, all fees are waived by simply signing up for e-delivery of statements, the annual privacy policy notice, and various other updates … so unless you insist on paper communications, Vanguard’s SEP IRA is effectively fee-free.

Related: How to Get Free Stocks for Signing Up: 7 Apps w/Free Shares

FAQs About Simplified Employee Pension (SEP) IRAs?

---

Retirement planning can be difficult for small business owners and people working for themselves (e.g., freelancers, gig workers, and contractors), because they often don’t have access to a 401(k) plan or other employer-sponsored retirement plan.

That’s where a SEP IRA comes in. A SEP IRA is a tax-advantaged account designed for business owners and self-employed workers who want some sort of retirement account. Business owners can also use SEP plans to provide retirement savings for eligible employees. If you want tax savings, convenience, and flexibility, a SEP IRA might be an attractive option for you.

However, after looking at some of the best SEP IRAs available, you still might have some questions about how they work and whether they’re right for you. But don’t worry—we’ll answer some of the most common questions business owners and self-employed individuals have about SEP IRAs in the following sections.

Who’s Eligible for a SEP IRA?

To open a SEP plan, you must either be self-employed or own a business and have at least one employee other than yourself or your spouse. This includes self-employed individuals or small businesses that are structured as sole proprietorships, partnerships, C corporations, and S corporations.

For an employee to be eligible for a SEP IRA through his or her employer’s plan, the worker must meet certain criteria, such as:

• Being 21 years old or older
• Having worked at least three of the last five years for the employer
• Earning at least $750 from the employer during the year (2023 amount)

Employers can customize eligibility requirements as long as they aren’t more restrictive than the criteria listed above. They change the requirements from year to year, too.

How Can I Set Up a SEP IRA?

Setting up a SEP IRA is relatively straightforward compared to the process for establishing other types of retirement plans (e.g., 401(k) or 403(b) plans). Per the IRS, you can set up a SEP plan in four simple steps:

1. Choose a financial institution to serve as trustee of the SEP IRAs (e.g., one of the SEP IRA providers listed above)
2. Create a written agreement that indicates you’ll provide benefits to eligible employees
3. Give employees information about your agreement
4. Open SEP IRA accounts for eligible employee

The IRS offers a template (Form 5305-SEP) you can use for your written agreement.

When Can I Open a SEP IRA?

The deadline for creating a SEP plan for the 2023 tax year is your business’s tax filing due date (including any tax filing extensions) for the year.

Related: Best Apps That Give You Money for Signing Up

Can I Open a SEP IRA for Just Myself?

You can open a SEP IRA just for yourself if you’re self-employed without any employees. However, if you have any eligible employees, you must also open a SEP IRA for each of them.

How Much Can I Contribute to a SEP IRA Each Year?

Contributions to SEP IRAs are based on a percentage of the recipient’s compensation, and the percentage must be the same for all recipients (including for the business owner).

However, total annual contributions to a SEP IRA are limited by law. For 2024, employer contributions to an eligible employee’s SEP IRA can’t exceed 25% of the first $345,000 of the worker’s salary or $69,000, whichever is lower.

The same limits apply to a business owner’s or self-employed person’s own SEP account. However, if you’re self-employed, your compensation is equal to your net earnings from self-employment, minus any contributions to your own SEP IRA and half of your self-employment tax.

YATI Tip: “Catch-up” contributions for account holders who are at least 50 years old aren’t allowed with a SEP IRA.

Is There a Vesting Period With SEP IRAs?

No. Contributions to SEP IRAs are immediately 100% vested (i.e., owned) by the account holder.

What Investment Options Are Available for SEP IRAs?

There’s a wide variety of investment options allowed with SEP IRAs, including stocks, bonds, mutual funds, and ETFs. However, there are some restrictions on investing in coins, collectibles, real estate, and certain other investments. The exact type of investments available will depend on the custodian or broker managing the SEP plan.

Each account holder manages investments in his or her SEP IRA. Generally speaking, investors can choose from the available investment options to match their retirement goals and risk tolerance.

Related: How to Get Free Money Now [Ways to Earn Money]

When Do I Pay Taxes on SEP IRAs?

As with a traditional IRA, a SEP IRA account is funded with “pre-tax” dollars. In other words, contributions aren’t included in taxable income, so they’re made before income tax is imposed on those funds.

How is this accomplished? Contributions to SEP IRAs from self-employed people and business owners are tax deductible. For employees, contributions aren’t included in their gross income from employment (i.e., they’re not counted as wages or other taxable income).

Once in the account, money in a SEP IRA grows tax-free until withdrawn in retirement. Once withdrawn, income taxes must be paid on SEP IRA funds at the same federal tax rate applied to the account holder’s wages, tips, taxable Social Security benefits, and other “ordinary” income.

Withdrawals made before the account holder is 59½ years old are generally hit with a 10% early distribution penalty (although there are exceptions).

How Does a SEP IRA Compare to a Traditional or Roth IRA?

While SEP IRAs are similar in name to traditional and Roth IRAs, there are some important differences to be aware of, including different contribution limits and rules about employer contributions.

Here’s a rundown of the most significant differences.

Related: SEP IRA vs. Roth IRA: What’s the Difference?

Source of contributions

With a traditional or Roth IRA, an employee contributes to their own account. However, with a SEP IRA, employees don’t contribute at all. Instead, SEP IRAs are solely employer-funded accounts.

Contribution limits

The combined contribution limit for both traditional and Roth IRAs is just $7,000 for 2024. You can also make an additional $1,000 “catch-up” contribution if you’re age 50 or older.

While setting aside an extra $7,000 for retirement is great, SEP IRAs offer potentially higher contribution limits. This can be helpful if you’re looking to turbo charge your retirement savings. As noted earlier, the SEP IRA contribution limits for 2024 are 25% of an employee’s salary or $69,000, whichever is lower—and “catch-up” contributions for people who are at least 50 years old aren’t allowed for SEP IRAs.

Income limits

If your income is too high, your Roth IRA contribution limit can be reduced or even eliminated. For 2024, the maximum amount that you can contribute to a Roth IRA is gradually reduced to zero if your modified adjusted gross income (AGI) is:

• $146,000 to $161,000 for single and head-of-household filers
• $230,000 to $240,000 for joint filers

If you’re married but file a separate tax return, your maximum contribution is gradually reduced to zero if your modified AGI is between $0 and $10,000.

Income limits don’t exist for a SEP IRA (or for a traditional IRA).

Required minimum distributions

If you have a traditional IRA or SEP IRA, you’ll need to start taking required minimum distributions (RMDs) from these accounts once you reach age 73. If you don’t, you could end up paying a penalty of up to 25% of your annual RMD amount.

You don’t need to take RMDs with a Roth IRA, though. So, you can opt to leave your money in a Roth IRA for as long as you like.

Tax treatment

Traditional IRAs, SEP IRAs, and Roth IRAs have different tax advantages. With a traditional IRA, you qualify for a tax deduction in the year contributions to the account are made, but the deduction might be reduced (potentially to $0) if you or your spouse are covered by a retirement plan at work and your modified AGI exceeds a certain limit. A traditional IRA also offers tax-deferred growth, meaning money in the account isn’t subject to income tax until it’s withdrawn.

A SEP IRA is a type of traditional IRA, so the tax treatment is similar (e.g., tax-deferred growth). But, as noted before, SEP IRA contributions are made by employers, so contributions are tax deductible for employers—not employees. Nevertheless, employees benefit by not having SEP IRA contributions included in their taxable income.

Roth IRAs, on the other hand, are funded with “after-tax” contributions. This means you can benefit from tax-free growth and tax-free withdrawals in retirement, but you won’t get a current-year tax deduction for your contributions.

Related: Best Rollover IRA Accounts [Where to Rollover a 401(k)]

Which IRA is Best for Self-Employed Small Business Owners?

A SEP IRA is an appealing retirement savings vehicle for both self-employed professionals and business owners, primarily because it can offer higher contribution limits than a traditional or Roth IRA. As a result, SEP IRAs can be a smart option whether you run a one-person business and are interested in padding your retirement savings, or if you have a few employees and would like to give them access to an employer-funded retirement account.

Just keep in mind that, because of the way the plan is structured, you’ll need to contribute the same amount for each of your employees. So, if you add 10% of your compensation to your own SEP IRA account, you’ll need to do the same for other members of your team. For this reason, a SEP IRA is often better if you have no employees or very few.

Related:

• Solo 401(k) vs. SEP IRA: What’s the Difference?
• How to Use Your HSA for Retirement
• Retirement Saver’s Tax Credit: What Is It, How Much, Who’s Eligible + More