• What is a Simplified Employee Pension IRA (SEP IRA)?

    Last Updated: August 04, 2015 12:30PM EDT
    A SEP IRA is a simple and efficient way for self-employed individuals and small business owners to save for retirement without the stress of complicated plan administration. Betterment supports SEP IRAs for only one plan participant. Typically, small businesses with two or more participants may also set up a SEP IRA for multiple employees. However, Betterment does not support this type of SEP IRA at this time.
    SEP IRA contributions are treated like traditional IRA contributions and are based on self-employed income. In general, contribution limits for SEP IRAs are higher than contribution limits for traditional and Roth IRAs. 

    You can read this article to learn more about Betterment SEP IRAs. 
  • Can I have more than one participant in my Betterment SEP IRA?

    Last Updated: April 24, 2017 4:37PM EDT
    No. Betterment does not support SEP IRA plans with more than one participant. Our SEP IRA is great for freelancers or small-business owners with no other employees participating in the plan. SEP IRAs can typically be used by small-business owners to provide retirement benefits to employees, and we are working to provide this capability in the future. If you plan to hire additional employees, please contact your tax advisor.
  • What forms do I need to fill out to get started with my SEP IRA?

    Last Updated: April 24, 2017 4:38PM EDT
    It’s easy to start a SEP IRA with Betterment. When opening up a SEP IRA with Betterment, we’ll simply ask you to complete IRS Form 5305 and keep it for your own records. You do not need to mail this form to the IRS or to Betterment.

    To start a SEP IRA with Betterment:
    1. Go to the Summary page of your account
    2. Click “Add Account” from the top right of your screen
    3. Choose the SEP IRA option (from the “Tax-advantaged Retirement” section)
    4. Download and complete IRS Form 5305 and keep it for your records. You do not need to mail this form to the IRS or to Betterment.

  • Can I contribute to a SEP IRA and a traditional or Roth IRA?

    Last Updated: June 15, 2016 1:45PM EDT
    Yes. You can make contributions to a SEP IRA and make regular, annual contributions to a traditional or Roth IRA. If you participate in a SEP IRA, you are considered an active participant in an employer-sponsored retirement plan. Typically, your contributions are tax-deductible, but this can change based on other retirement account contributions you are making, your income, or other factors. Contact your tax advisor and read more on the IRS website
  • What's the difference between a SEP IRA and a traditional or Roth IRA?

    Last Updated: April 24, 2017 4:39PM EDT
    For self-employed individuals, the primary difference between a SEP IRA and a traditional or Roth IRA is the annual contribution limit. In 2017, you may be able to contribute up to $53,000 to a SEP IRA, compared to only $5,500 for a traditional or Roth IRA ($6,500 if you’re 50 and older). 

    To learn more about the advantages of a Betterment SEP IRA, you can read this article
  • What tax forms will I receive from Betterment for my SEP IRA at the end of the year?

    Last Updated: June 15, 2016 1:44PM EDT
    You will not receive any tax forms for your contributions, as the deadline for contributions is the due date of your tax return. However, any contributions will be reported on the Form 5498. This form is reported directly to the IRS by Betterment and will be uploaded to your account for reference.

    You will receive a Form 1099-R if you made any distributions at tax time.
  • How long will it take for my SEP IRA to transfer to Betterment?

    Last Updated: April 24, 2017 4:40PM EDT
    Rollovers typically take 2 to 3 weeks to complete.  You can contact your existing institution to liquidate the funds before it rolls over to help move things along. You will receive a confirmation email from rollovers@betterment.com once the rollover has completed.  

    To get started, go the Transfer page, click "Rollover" and follow the prompts. There are no negative tax consequences for a direct transfer. 
  • How much can I contribute to a Betterment SEP IRA?

    Last Updated: June 29, 2016 10:19AM EDT
    SEP IRA contributions depend on the type of your business, your self-employment income and IRS income and contribution limits that vary by year. To learn more about how much you specifically can contribute, please refer to the IRS’s calculator or speak with your tax advisor.

    Please note that Betterment currently only supports SEP IRAs for small business owners who have no employees.
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