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RMD required
SEP IRA
A Simplified Employee Pension (SEP) IRA is a retirement plan funded by employer contributions into individual IRA accounts — commonly used by small businesses and self-employed people.
Who might have one?
- Self-employed individuals and sole proprietors
- Small business owners with few or no employees
- Freelancers and independent contractors with variable income
- Partners in small firms using SEP for owner retirement savings
Why would you have one?
- Make large tax-deductible contributions in profitable years
- Simple setup compared to a full 401(k) plan
- Fund retirement savings for yourself (and eligible employees)
- Flexibility — no required contribution every year
How RMDs work for this account
SEP IRAs are treated as Traditional IRAs for RMD purposes. You must calculate and take RMDs using the same IRS life expectancy tables. SEP IRAs can be aggregated with other Traditional IRAs for withdrawal purposes.
Common mistakes
- Forgetting SEP IRAs follow Traditional IRA RMD rules
- Not including SEP IRA balances when calculating total IRA RMDs
- Assuming business ownership exempts you from personal RMD obligations
Frequently asked questions
- Do SEP IRAs have RMD requirements?
- Yes. SEP IRAs follow the same RMD rules as Traditional IRAs, including required beginning dates and IRS life expectancy tables.
Related account types
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