Self-Directed SEP IRA
The ultimate retirement plan for small businesses and the self-employed with the highest contribution rate of any IRA.
Simplified Employee Pension (SEP) IRAs are retirement plans designed for small businesses with up to 25 employees or self-employed individuals.
With a Horizon Trust as your custodian, you can self-direct your SEP IRA and invest in alternative assets like real estate, precious metals, and private equity,, to name a few of the options that aren’t available in traditional investing.
Employer contributions to SEP IRAs are tax-deductible and grow tax-deferred, providing a double tax advantage. Contribution limits for SEP IRAs in 2025 are $70,000 or 25% of your compensation, and unlike Solo 401(k)s, SEP IRAs allow you to set up plans for employees.
2025 SEP IRA Contribution Limits and Deadline
- Max Dollar Allocation: $72,000
- Max Considered Compensation: $350,000
- Contribution Deadline: 4/15/2026
A Powerful Retirement Plan for Business Owners
Complete the form below to explore how a Self-Directed SEP IRA can support your business or self-employed income with tax-deductible contributions and flexible investing.
Proven Success. Trusted Leadership. Real Impact.
At Horizon Trust, we make it simple to open and manage a Self-Directed IRA, so you can take control of your retirement on your terms. Founded by Greg Herlean, who has overseen more than $1.3 billion in real estate transactions, Horizon Trust was built by someone who understands what self-directed investors need: personalized service, fast transactions, and a custodian that stays out of your way.
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Why SEP IRAs?
Other Retirement Plans Limit Your Investing Options
For small business owners with up to 25 employees, setting up a standard 401(k) plan can be expensive and require endless paperwork.
Alternative retirement plans like self-directed IRAs and Solo 401(k)s offer flexibility, but may fall short on your individual needs.
- IRAs and 401(k)s have substantially smaller contribution limits, restricting your ability to scale your portfolio with compound interest.
- Solo 401(k)s, also known as Individual 401(k)s, are strictly limited to sole proprietors.
- Standard banks and financial institutions don’t offer self-directing options, leaving you stuck in the stock or bond markets.
Why Self-Directed SEP IRAs Appeal to Small Business Owners
- Self-Directing: Combine the high contribution limits with a self-directed account to expand your investment horizons.
- Higher Contribution Limits: SEP IRAs have the highest contribution limits of any retirement plan, nearly double that of 401(k)s.
- Tax Deductible Contributions: All employer contributions to a SEP IRA are tax-deductible, giving you a second tax advantage on top of your tax-deferred growth.
Account set up is easy and Horizon Trust offers over a dozen exclusive investment resources to help you start putting your money to work.
SEP IRA Highlights
Tax Advantages
Employer contributions are tax-deductible and grow on a tax-deferred basis until funds are withdrawn in retirement.
Eligibility
Any business entity (sole proprietors, partnerships, LLCs, or corporations) can establish a SEP IRA for themselves and their employees.
Contribution Limits
Employers may contribute up to 25% of each eligible employee’s compensation, with a maximum annual cap of $70,000.
Employer Contributions
The employer must contribute the same percentage of pay for every eligible participant in the plan.
Rollover Options
SEP IRA funds can be rolled over or transferred into another SEP IRA, Traditional IRA, or Roth IRA without losing tax advantages.
Qualified Expenses
Funds withdrawn for qualified retirement purposes may also be used for certain medical expenses such as deductibles, copayments, prescriptions, and approved over-the-counter items if applicable under IRS rules.
Who Contributes
Only employers contribute to SEP IRAs; employees do not make direct contributions.
Withdrawals
Distributions taken before age 59½ are subject to ordinary income tax and a 10% early-withdrawal penalty, unless an IRS exception applies.
SEP IRAs Help Small Business Owners Invest for Retirement Quicker
Whether you’re fast approaching retirement age or want to invest your savings in a tax-deferred account, a self-directed SEP IRA is the best account to help you reach your retirement goals.
Some reasons small business owners prefer SEP IRAs to other retirement plans include:
- Easy account setup and onboarding, especially for solo entrepreneurs
- SEP IRAs have more than double the contribution limits of standard 401(k)s
- All contributions are tax-deductible and grow tax-deferred–a two-for-one advantage
Contact one of our custodians today to learn more about SEP IRAs, eligibility requirements, and how to open an account.
Open a Self-Directed SEP IRA Account in 4 Simple Steps
Horizon Trust can help set up a self-directed SEP IRA for your business that will allow you to contribute and invest in your SEP IRA quickly.
At Horizon Trust, we believe in turning dreams into reality. Founded by Greg Herlean, who has masterfully managed over $1.3 billion in real estate transactions, our mission is to empower you to take control of your financial destiny using the tax-free advantages of a Self-Directed IRA. Retire wealthy.
Here’s how it works:
STEP 1
Create Your SEP Agreement
Both employers and self-employed individuals can establish a SEP IRA by completing IRS Form 5305-SEP. You can do this on your own or with help from Horizon Trust’s account specialists, who ensure your plan meets IRS requirements.
STEP 2
Inform Eligible Employees
If you have employees, you must provide each eligible team member with details about the SEP IRA, including contribution rules and eligibility guidelines. Horizon Trust can supply clear plan documents and templates to make this step simple.
STEP 4
Select Your Investment and Direct Horizon Trust to Fund It
Once your SEP IRA is established and funded, you can choose your investment and instruct Horizon Trust to send funds on behalf of your account.
Our online tools simplify the process, and our support team is available to assist with each step, from documentation to transaction approval.
STEP 3
Set Up Accounts and Fund Your New Tax-Advantaged Account
There are several convenient ways to fund your SEP IRA:
- Rollover funds from an existing employer retirement plan.
- Transfer an existing IRA from another custodian.
- Contribute directly from your business income or savings.
Disclaimer
Horizon Trust Company is an independent passive Custodian and is not associated or affiliated with and does not recommend, promote or advise any specific investment, investment opportunity, investment sponsor, investment company or investment promoter or any agents, employees, representatives or other of such firms or entities. Investments are not FDIC Insured, offer no bank guarantee and may lose value.
Learn About Self-Directed SEP IRAs
What Exactly is an SEP IRA Again?
A Simplified Employee Pension Individual Retirement Account (SEP IRA) is an alternative IRA used for retirement savings. SEP IRAs allow business owners to set aside up to 25% of an employee’s income for their retirement account and don’t have many of the upfront costs and fees that traditional IRAs have.
A SEP IRA can be set up for business owners and their employees, making this a very attractive alternative for SMBs looking to access the company-wide benefits of a 401(k) inside an IRA.
SEP IRA accounts offer the same tax advantages and investment options as other IRAs.
SEP IRA Eligibility
SEP IRAs are designed for self-employed individuals and small-business owners seeking an investment vehicle for tax-deferred retirement savings.
To meet the eligibility requirements for a SEP IRA, the following must apply:
- You earn self-employment income/freelance income by providing a service.
- You’re a business owner.
- You’re in a partnership.
- You’re a sole proprietor.
Employers must contribute on behalf of their employees to a SEP IRA because they are considered eligible plan participants by the IRS.
Based on IRS rules, employee contributions must match an equal percentage of compensation given to the business owner.
Additionally, employees can be eligible for SEP IRA participation if they are at least 21 years of age, have worked for an employer for three of the past five years, and have made the IRS’s current minimum income requirement ($750 in tax year).
SEP IRA Individual and Employer Contribution Limits
Contribution limits differ based on your status as either an employer or employee. As of 2025, employers can either contribute up to 25% of an employee’s total compensation or $70,000.
If you’re a self-employed person, contributions are generally limited to 20% of net income.
Something that makes SEP IRAs unique is that employees can’t defer salary for contributions.
SEP IRA vs. Traditional and Roth IRAs
While SEP IRAs and Roth IRAs both offer tax benefits upon retirement, these two options come with tax tradeoffs that investors should know about.
For example, SEP IRA offers tax-deferred growth on your investment. A Roth IRA provides tax-free growth and withdrawals.
Another difference between SEP and Roth IRAs is that SEP IRAs allow employers to add employees to their accounts. Roth IRAs are strictly for a single person..
SEP IRA contribution limits are higher than limits for traditional IRA contributions. With the difference being $70,000 versus $7,000, this is no small detail for people with big retirement plans.
It’s also interesting to compare the SEP IRA with the Savings Incentive Match Plan for Employees or SIMPLE IRA when deciding between employer-sponsored retirement plans.
While only employers can contribute to the SEP, the SIMPLE IRA allows employees to contribute using elective deferrals that remove money from their paychecks.
Additionally, SIMPLE IRA contributions are capped at $16,500 (2025). While that limit is lower than the SEP limit, SIMPLE IRAs do allow for a “catch-up” of $3,500 for employees over age 50.
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