Dictionary of Banking Terms: Simplified Employee Pension Plan (SEP)
Simplified Employee Pension Plan (SEP)
type of pension plan that allows small businesses or sole proprietors to set aside up to 15% of gross annual sales on a tax deferred basis for retirement savings. Funds can be contributed to an individual retirement account or to an annuity. Employees contributing to a SEP are also entitled to claim a tax deduction for their annual contribution.
