How to Open a SEP
A simple employee pension (SEP) is a type of individual retirement account (IRA). Most commonly abbreviated to "SEP-IRA" or "SEP IRA", the plan is generally set up by a business for its employees' retirement benefit. Most often, a business owner can also contribute to a SEP-IRA plan for his own retirement benefit. SEP IRAs generally have low administrative fees and require a custodian to monitor the plan.
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Instructions
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Go to the Internal Revenue Service's website and download Form 5305-SEP, "Simplified Employee Pension---Individual Retirement Accounts Contribution Agreement" (see Resources). Read the entire form to become familiar with contribution and tax provisions.
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Contact a financial planner or your business banking institution. Ask to establish a SEP-IRA. Complete Form 5305, "Simplified Employee Pension---Individual Retirement Accounts Contribution Agreement" and send it to the financial planner or bank representative, along with the minimum opening deposit, which is generally $500. The planner or bank representative will assign a custodian.
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Receive the enrollment application and documentation. Distribute an enrollment application to each eligible employee. Under IRS guidelines, the employee must be at least 21 years of age, earn more than $500 per year and have been employed by your business for the past three years.
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