SEP stands for Simplified Employee Pension, which is a type of retirement plan used in the United States. SEP IRAs are adopted by business owners to provide retirement benefits for themselves and their employees. Some key features of SEP IRAs include:

• Contributions to a SEP plan are deductible, lowering a taxpayers income tax liability in the contribution year.
• SEP-IRA funds are taxed at ordinary income tax rates when qualified withdrawals are taken after age 59+1/2 (as for traditional IRAs) .
• SEP contributions and earnings are held in SEP-IRAs and can be withdrawn at any time, subject to the general limitations imposed on Traditional IRA.
• For employees, the employer may contribute up to 25% of the employees wages to the employees SEP-IRA account.
• SEP IRAs often have higher annual contribution limits than standard IRAs.

SEP IRAs are an attractive option for many business owners because they do not come with many of the start-up and operating costs of most conventional employer-sponsored retirement plans.