If you are thinking of creating a retirement account, there will always be several options to select. Each of these retirement accounts is regulated differently when it comes to contribution limits, rollovers, and so on. However, if you have a business investment, or earn through freelance, then the best retirement account to go for is the simplified employee pension plan.
In simple terms, a simplified employee pension (SEP) plan refers to a retirement saving plan that the employer creates to either benefit their workers or themselves. Unlike other retirement plans, the SEP doesn’t necessarily require start-up capital or operating costs. However, for you to be eligible for SEP, you must be 21 years of age. At the same time, you must have worked for three years within the past five years. The other thing IRA will look at before approving your eligibility is that you must have earned at least $600 within the past year.
Unlike other existing savings plans, the SEP is unique in that it encourages those working in private sectors, such as self-employed people, to save for their retirement. Therefore, to encourage more retirement benefits from businesses, the plan does have flexible annual contributions, which is a good thing for those having an issue with their cash flow. Also, the plan is easy to set up and operates with low administrative costs.