Definition of Simplified Employee Pension Plan / SEP
Simplified Employee Pension Plan / SEPA qualified retirement plan created for small employers with 25 or fewer employees, which allows the employees money to grow tax-deferred until retirement.
Applying "Simplified Employee Pension Plan / SEP" to Securities Exams:
A SEP IRA allows an employer to make contributions into an employee’s retirement plan. The employee (or employer, on their behalf) must first set up a SEP IRA. As this is a qualified retirement plan, the employer cannot discriminate between employees; if contributions are made to one employee’s plan, the same percentage contributions must be made to all eligible employees’ plans. Employees are also immediately vested with SEPs, so from inception they are entitled to all the employer’s contributions to the plan.