Self-Directed SEP IRA

Learn These Guidelines for a Self-Directed SEP IRA

You might have heard of the Self-Directed SEP IRA. Also known as the Simplified Employee Pension IRA, the SEP IRA is a simple, straight-forward way for many investors to put money away towards retirement. While you can read up on the Self-Directed SEP IRA here at the American IRA website, we decided to take today to focus on one aspect of those SEP IRAs: the guidelines that make them possible. Here’s what you’ll need to know.

What are Self-Directed SEP IRA Guidelines?

These guidelines help establish who can use SEP IRAs and in what fashion they can use them. On the section of our website devoted to Self-Directed SEP IRAs, we pointed out what these are. Here are some of the most important points for you to retain:

  • Tax-deductible contributions. The contributions you make to your SEP and your employees’ SEP (if you have employees) are tax-deductible. This means that the money is considered “before-tax” money for retirement investing purposes, meaning that you still owe taxes on this money when you take the money out of the retirement account.
  • Annual contribution limits. Like any other retirement account type, there are specific contribution limits to pay attention to. In the case of a Self-Directed SEP IRA, it cannot exceed the lesser of 25% of compensation, or $61,000 for 2022, which is subject to cost-of-living adjustments for later years. This is a unique way to understand that the SEP IRA does have high contribution limits, but those contribution limits can change depending on your individual circumstances.
  • Employees can control their contributions. In fact, employees have complete control over their contributions, as we mention on our website. That’s an important distinction to help understand why these can be so appealing for employees who get to make their own choices. However, it’s important that you keep in mind that the percentage you contribute as the employer must be the same for all employees. So, while you get to choose what percentage you contribute, you have to make sure that this standard applies equally; you won’t be giving yourself a higher percentage than you would any other employee, for example.

There are other guidelines in effect, such as the ability to make contributions up until you file taxes every year, which includes extensions. However, it’s important to consult with a tax professional to make sure that you’re using the SEP IRA properly.

For SEP IRAs, it’s usually a question for many people who own their own business. For this reason, SEP IRAs are popular with investors who may have their own LLC, for example, even if they are the only employee in that business. This makes a SEP IRA very easy to use and to operate.

Using a Self-Directed SEP IRA

Self-directing is the process through which you can gain access to easily investing in a wide range of retirement asset classes that are possible through retirement accounts. This means taking control back into your own hands and working with a Self-Directed IRA custodian. To make sure that you’re doing it right, it helps to work with someone you trust.

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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