Too Busy for Retirement Planning? Consider a SEP-IRA

Too Busy for Retirement Planning? Consider a SEP-IRA

May 30, 2024

If you're anything like our thriving, entrepreneurial clients, running your own business is an all-consuming endeavor that sees you wearing many hats: shareholder, director, marketing executive, administrator, cleaner, technical support, customer service agent… and more!

But one thing I am beginning to see all too often that our clients don’t view themselves as, is retirement planners. In the face of everyday demands, choosing a retirement strategy for your business can become a casualty. 

And I get it. I’m a busy business owner myself. I’ve been there. That’s why I consider my role and that of my team members here at Truman Wealth as being so much more than just financial advisors. We’re here to help humanize the reality of business ownership and self-employment. We listen, remove shame, problem solve and help you move forward successfully.

Too Busy to Consider a Retirement Strategy?

I met with a business owner friend a few days ago. I asked her how she was doing, and how her family was enjoying the spring weather. She looked up, voice lowered, and just whimpered: “I’m so busy… I am so busy… I have so much going on.”

It’s something I hear increasingly from friends and clients alike. And maybe adding other things to your seemingly endless to-do list is just not something you have capacity for right now, especially if the idea of establishing a retirement plan evokes fears over complicated reporting and administration.

So let me help make at least one to-do list item a little bit easier for you: Introducing the Simplified Employee Pension Individual Retirement Arrangement (SEP-IRA), designed to help  provide a significant source of income at retirement by allowing you to set aside money in unique accounts for yourself and your employees.

Retirement Planning Made Simple

Was that a collective sigh of relief I heard, dear readers?! 

Retirement planning really doesn’t have to be as complicated as you think. And because the  SEP-IRA can be established by sole proprietors, partnerships, and corporations - including S corporations - it’s a good option that any kind of business owner or self-employed person can establish.

And you know all that additional paperwork you were dreading? It doesn’t exist here. SEP-IRAs can often be opened and funded online on the same day. There is also no additional tax filing needed for SEP-IRAs on behalf of your business. And there are even additional tax advantages in establishing a plan.

The SEP-IRA also avoids common start-up and operating costs of most conventional employer-sponsored retirement plans. Many employers also set up a SEP IRA to contribute to their own retirement at higher levels than a traditional IRA allows.

Plan Your Retirement with Flexibility and Ease

Other advantages of the SEP (what there’s more, you ask?!) begin with the flexibility to vary employer contributions each year from 0% up to a maximum of 25% of compensation, with a maximum dollar contribution of $66,000 in 2023, and $69,000 in 2024.1

The percentage you contribute must be the same for all eligible employees. Eligible employees are those age 21 or older who have worked for you in three of the last five years and have earned at least $750. Employees are immediately 100% vested in all contributions.1

There are no plan filings with the IRS, making administration simple and low-cost. You only need to complete Form 5305 SEP and retain it for your own records. This form should be provided to all employees as they become eligible for participation.

Unlike other retirement plans, a SEP may be established as late as the due date (including extensions) of your business’ tax filing (generally April 15th) for making contributions for the prior year.

Self-Directed Options = Less Work for YOU

Hate endless menus and options? Then you’ll love the way the SEP-IRA is structured. Each eligible employee will be asked to establish their own SEP-IRA account and self-direct the investments within the account, relieving you of choosing a menu of investment choices for the plan.

The rules for accessing these funds are the same as those governing regular IRAs. In most circumstances, once you reach age 73 you must begin taking required minimum distributions from a SEP-IRA and other defined contribution plans.

Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.2

Make Life Even Easier: Work with an Expert

The SEP certainly earns the “simplified” in its name and stands as an attractive choice for business owners and self-employed folk looking to maximize contributions while minimizing their administrative responsibilities.

But if you’re looking to take even more stress off your plate, then perhaps consider working with an expert who truly understands what it’s like to be a self-employed business owner. We talk the talk because we walk the same walk as you every single day.

At Truman Wealth Advisors we get it. We know it’s all too easy for busy business owners to solely focus on business finances and neglect their own personal finances and retirement. We’re not here to shame, we're here to help.

Working with Truman Wealth Advisors gives you the freedom - and confidence - to make your ultimate retirement from a life of “busy” into a concrete reality. There’s just one more thing you’ll have to add to your to-do list first: Get in touch with us.

  1., 2024
  2. IRAs have exceptions to avoid the 10% withdrawal penalty, including death and disability.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.