Ode to the SEP IRA

"The SEP IRA is a freelancer and business owners best and easiest way to save for retirement. You can apply for a tax filing extension to give you a little more time to sort out how much you actually made in the year and will want to contribute to your SEP IRA. Typically, people with a SEP IRA save about 20% of their net income, which can often drop them into a lower their tax bill."

"But for my business owners and gig workers the SEP IRA does exactly what you need it to. It lowers your tax bill. It moves money into retirement. It requires minimal effort. In a world of overcomplicated money advice, the SEP IRA is a welcome reprieve. I love it. I think it's the best retirement account for a huge number of people. And I think it deserves its flowers."

SEP stands for Simplified Employee Pension and is a retirement account for people with self-employment or business income, including freelancers, consultants, and business owners. The account is opened in an individual's name at brokerages like Vanguard, Fidelity, or Charles Schwab, where contributions are invested and grow tax-deferred. Contributions are tax-deductible and commonly around 20% of net income, which can reduce taxable income. Eligible income is typically 1099 or cash earnings; those without such income should use employer 401(k) plans or traditional IRAs. Tax filing extensions can provide extra time to determine contributions.

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