Simplified Employee Pension Plan

Under a Simplified Employee Pension (SEP), the sponsoring employer makes contributions to the plan periodically on behalf of eligible employees. The employer may vary the amount of contribution from year to year and may choose not to contribute in some years.

Each participant's share of the employer's contribution is deposited in an Individual Retirement Account or Individual Retirement Annuity in the name of the participant. Once the Simplified Employee Pension Contribution is made, it effectively "belongs" to the participant. As with any individual account type plan, the participant's ultimate benefit is tied directly to the value of his or her personal (IRA) account.