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Simplified Employee Pension

A Simplified Employee Pension (SEP-IRA) is a traditional IRA retirement plan set up by an employer for a firm's employees. Only the employer contributes to the plan, but a self-employed individual is considered the employer for these purposes.

Expanded Definition

An employer may contribute up to the lesser of 25% of an employee's compensation or $49,000 (2010 amount) annually to each employee's IRA. The compensation and dollar contribution limits are indexed to inflation.

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