What is a Self-Directed SEP-IRA?

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With the Rocket Dollar SEP-IRA, similar to a Solo 401(k), works best for a small business owners with W2 employees. You can have employees with a Self-Directed SEP-IRA as long as you contribute equally to eligible participants.


The SEP-IRA can be purchased for

Silver: $360 and then $15 a month

Gold: $600 and then $30 a month.

Can I open my SEP IRA with either Direct Custody or Checkbook IRA.

Yes. As of 9-19-22, you can purchase a Direct Custody Traditional IRA and message Rocket Dollar right after onboarding to switch the account to a SEP IRA. Official SEP IRA onboarding is coming soon. 

To purchase a Self-Directed SEP IRA Checkbook you can do so during onboarding by selecting "Checkbook IRA"

If you are interested in the differences between these products, the retirement contributions are the same, but custody investments in a different structure allows the investor to pursue investments at different speeds. You can read more here on the differences between a Direct Custody vs an Checkbook IRA enabled IRA.

Who usually uses a SEP - IRA?

The Rocket Dollar SEP IRA is typically used by small business owners or partners that have W2 employees or if an employee wishes to add alternative investments to their portfolio instead of just stocks at bonds.

If you currently have a SEP IRA, but are no longer employed by that company you originally created it for, Customers can still open a Traditional IRA or Solo 401(k) with a Silver Account to receive those pre-tax retirement dollars. 

The SEP-IRA is not as popular as our Solo 401(k) or IRA products. Traditional IRAs serve most investors in a more simple structure, and Solo 401(k)s serve solo-entrepreneurs or spouses who work at the same small business with no W2 employees. 

The SEP-IRA is perfect for a small company of employees that can receive the same retirement contribution every year, if the business owner decides to contribute to all employee's SEP IRAs. If you are a business owner desiring a flexible alternative friendly 401(k) instead, you can contact our sales team at info@rocketdollar.com. Rocket Dollar does not offer corporate 401(k) plans, but can refer you to a company. 

Who should not use a SEP IRA?

  • Large employee bases can strain the resources of administration or HR to manage contributions to all the accounts. 10+, 20+, and 30+ employees can make managing a SEP IRA more difficult. It is very uncommon for 30+ employee companies to use a SEP IRA rather than a corporate 401(k) plan.
  • Employee bases with widely varying compensation levels. This can make "one size fits all" contributions difficult to pick. Business owners will typically use Rocket Dollar with their own personal IRA.
  • Solo or spousal business owners are better served by a Solo 401(k), which has more contribution options and Roth options

Does Rocket Dollar run corporate 401(k) plans for many employees?

No. You can contact our sales team to be referred to an affiliate that has alternative-friendly investments in 401(k)s @ info@rocketdollar.com

Do all my employees have to open a SEP-IRA with Rocket Dollar?

No. A SEP IRA is tied to an individual, yet a business owner can contribute the same yearly contribution or skip a year, for ALL eligible employees. This makes it a convenient mix between an individual retirement account (IRA) without the full complexity and administration of a corporate 401(k) plan. 

For example, a company polls its workforce of ten employees who are interested when the business owner asks them about their interest in starting a SEP-IRA retirement plan. Four employees have a high desire to invest in alternative investments, while six just a stocks and bonds-only experience. 

  • Four employees open a SEP IRA at Rocket Dollar. The business owner contributes the yearly contribution to these four employees at Rocket Dollar on their respective custodians. Those employees direct their accounts as they wish to pursue alternative investments and stocks and bonds.
  • Six employees open a SEP IRA at Fidelity, and the business owner contributes the yearly contribution to those six employees to the Fidelity platform in each of their accounts. Those employees direct their accounts to invest in stocks, bonds, ETFs, and mutual funds.

How would this work for myself and my employees at Rocket Dollar?

Your company card can be on file with all of your employees' Rocket Dollar Accounts if you wish to cover fees.

If you wish to sign up yourself or your employees in bulk for Rocket Dollar accounts, please contact our Sales team at 1-855-762-5383.

SEP Basics

A SEP-IRA at Rocket Dollar allows you to run a high contribution level plan, similar to that of a Solo 401(k) but also has employees. If you don't plan on having any employees, you can read about our comparison of the two types of plans here. 

SEP-IRA stands for Simplified Employee Pension Individual Retirement Account. Its administration is more straightforward and usually much cheaper than a full-fledged 401(k) plan. There is no magic number for the proper amount of SEP employees before a company should switch to an administered 401(k) plan. The IRS allows up to 100 employees to be in a SEP. However, because of the enforced rule of equal employer contributions, it usually works best for high-profit businesses with a smaller group (2-10) of similarly compensated employees. Using a Rocket Dollar SEP-IRA will allow ALL of your employees to hold almost any investment in their retirement accounts. 

Rocket Dollar does not offer company-wide 401(k) plans, but we are happy to help individuals with SEP-IRAs, Traditional IRAs, and Roth IRAs.

SEP-IRA Contributions Limits

Employer contributions can be calculated in two different ways but must be applied in the same way for all employees. First, the business owner decides if they want to contribute to that plan year or not. Then, they calculate a company-wide contribution. Employer contributions cannot exceed the lesser of:

  1. 25% of the employee's compensation
  2. $69,000 for 2024

The maximum employee salary you can use to calculate and report on the 25% compensation is $280,000 in 2019.

Example Contributions:

A company has 3 partners that all make $100,000 a year. 

  • The partners can personally choose to defer up to $20,000 (20% of their total compensation)
  • The company can set up a max company contribution of $25,000 (25% of their total compensation)
  • This means that by trying to max out contributions, each employee could save $45,000. 

Important Contribution Factors to Consider

  • Employer contributions ARE tax deductible for your business.
  • You get to decide if you IF and HOW MUCH you are contributing every year for your plan.
  • You can calculate employer calculations either way (25% of comp or $56,000)

SEP-IRA Contribution Deadlines

A SEP-IRA must be established before the tax filing deadline. All eligible employee plans for that plan year must be opened in the same year.

Contributions are due by April 15th in the following year.

  • 2021 contributions have until April 15th of 2022
  • 2022 contributions have until April 15th of 2023

What employees are eligible for a SEP-IRA plan?

If an employee meets the three conditionals below, they are eligible and must be included in the plan.

  • The employee is 21
  • The employee has worked for the employer for at least 3 out of the last 5 years
  • The employee has received at least $600 in compensation

If the employee meets the conditions below, they ARE NOT eligible.

  • Employees covered by a union agreement
  • Employees who are non-resident aliens and don't collect US wages

Roth Contributions

The SEP-IRA does not have Roth contributions. Any individual can open a Roth IRA at Rocket Dollar, and small business owners with no full-time employees can utilize a Self-Directed Solo 401(k) 

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