The SEP retirement plan is a great option for small companies and the self-employed, and can provide an excellent source of retirement income. Sole proprietorships, partnerships, S and C corporations and LLCs could all benefit from this plan . Most businesses are eligible for a tax credit of up to $500 per year for each of the first three years covering the cost of establishing the plan. The SEP retirement plan is simple to establish , and once in place is simple to operate. Small businesses appreciate the ability to interest a better caliber of employee to their job openings by being able to provide the additional incentive of the SEP retirement plan benefits. To be eligible for the SEP retirement plan, the employee needs to be 21 years old, have worked for the business for three of the last five years and been compensated with a minimum of $550 in wages. Many employers decide on a mutual fund company to administer the account. Each employee can then select their individual investments from the offered funds, relieving the employer from having to make those decisions. Contributions are not required, so the employer may decide on the percentage and frequency of those contributions based on the business’s profitability. Having a SEP retirement plan is a great alternative for smaller companies who might not have the resources to provide their employees a more conventional plan. The Simplified Employee Pension Plan, or SEP retirement plan makes that possible , at a significantly smaller expense and with less reporting requirements . There are significant benefits for both the employer and the employees. The SEP retirement account allows for much higher contributions, so qualified participants can rapidly build their retirement savings in a tax-sheltered environment. The benefits are fully vested immediately when they are contributed, making the SEP retirement account portable. Employees who change employers are allowed to roll their Sep balances into another IRA, or could choose to transfer them to another employer’s qualified retirement program.