Self-Directed SEP IRA

The Specific Advantages of a Self-Directed SEP IRA

Why open a Self-Directed SEP IRA? For many investors, the question is a non-starter, because they do not have any self-employment possibilities that make the SEP IRA possible for themselves. But for others, the SEP-IRA can be a powerful way to invest. There are a few reasons for this, and these advantages—many of which are specific to the SEP IRA—mean that investors should consider whether this might be the best option for them. Let us look at a few of these advantages right now:

Advantage #1: Low costs.

As we note on our Self-Directed SEP IRA page, a SEP IRA plan has low costs. Here is what we note: “Self-Directed SEP IRAs do not have the operating and start-up costs that most conventional employer plans do.” In other words, you do not have to pay a lot of money just to get a SEP IRA up and running. This means that you can continue to enjoy contributions to a SEP IRA without worrying about whether its operating costs are eating from your retirement savings. It is a simple, straightforward way to invest, and it helps give you peace of mind because you will not be wondering if you should be handling things another way. The low costs mean that a SEP IRA can be off to the races without you having to pull off a bunch of sophisticated accounting maneuvers.

Advantage #2: Tax-deductible contributions.

Of course, tax-deductible contributions are nothing new to savvy retirement investors, who realize that many retirement accounts allow for these. But here’s where things get interesting with a Self-Directed SEP IRA: you can make tax-deductible contributions of up to 25% of each employee’s compensation. And if you are self-employed, you are then considered an employee, which means that your own contributions can be extremely high relative to many other retirement investment accounts.

There are two things at work here. First, tax-deductible contributions help you save on your tax bill while currently investing for retirement, especially if you look at it from the mindset that you were going to invest in a retirement account anyway. Second, because the SEP IRA has such high contribution limits, it is a powerful way to put away a lot of money in a hurry.

Advantage #3: Variable contributions.

You do not have to contribute the same amount to your Self-Directed SEP IRA every year, which gives you plenty of flexibility to put a lot away when your business has a good year and less when it does not. You do not have to declare a set amount that your SEP IRA will contribute, giving you the flexibility to handle a wide range of economic circumstances.

Because the SEP IRA is so flexible, it is often a good idea for investors who have variable incomes due to the nature of their business. This means that even small business owners can utilize the SEP IRA in powerful ways, putting aside plenty of money for retirement.

Why should you consider a SEP IRA? First, head over to our SEP IRA section to find out if you qualify for this kind of account. There, you will also learn the benefits of the SEP IRA, many of which can help retirement investors maximize the value of their retirement dollar.

Once you have got a solid understanding of the SEP IRA and how it works, you will be able to consider whether one is right for you. And a Self-Directed SEP IRA can open up all sorts of possibilities for retirement investing on your own terms, allowing you to take control over your own retirement portfolio.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at

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