A SEP IRA (or Simplified Employee Pension IRA) is a type of traditional IRA that is set up and funded for employees by an employer. SEP IRA accounts are one of the best ways for self-employed people, small business owners, and freelancers, to contribute to their retirement savings.
SEP IRA contributions are made by the employer and can be used by sole-proprietors. Any business owner, with one or more employees, can open a SEP IRA.
This kind of retirement savings account can be a great choice for small business owners because they can save for retirement tax-free with much higher contribution limits than traditional or Roth IRA.
Today, we’re going to cover the best SEP IRA companies, what to look for when choosing one, and answer several frequently asked questions about SEP IRAs.
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7 Best SEP IRA Investment Providers
1. M1 Finance
M1 Finance is based in Chicago, IL and was launched in 2016 to reimagine portfolio management. Most investors will have their needs met with the free M1 Finance plan, but there is also a paid membership that’s free for the first free months and is $125 a year after that. The membership includes access to personal loans, checking and savings, crypto, margin loans, and more.
M1 Finance is one of the best SEP IRAs because:
- It offers over 60 pre-built portfolios for those who want a truly automated experience plus the ability to customize each one to your unique needs.
- We also love that there are zero management or trading fees, so you can put more of your money to work saving for retirementThe account set-up process is easy and straightforward, and you’ll be asked to decide which type of account you want to create when you onboard. You will need a minimum of $500 to invest in an SEP IRA or other IRA accounts, but otherwise the account minimum is $100.
Learn more in our full M1 Finance Review.
2. SoFi Automated Investing
- Account minimum: $0
- Fees: $0 management fees
- Pros: No annual or monthly management fees, access to certified financial planners, and membership benefits like discounts on other SoFi products and career coaching
- Cons: No tax-loss harvesting and no socially responsible investing options
SoFi is the newest option on our list of best SEP IRAs. Launched in 2011, it’s much more than just an online brokerage. SoFi was actually founded by four Stanford graduates who wanted to offer more affordable student loan options. Now, SoFi’s online-only platform offers student loan refinancing, mortgages, personal loans, credit cards, banking, and investing.
Here’s what makes an SEP IRA through SoFi worth checking out:
- $0 monthly account fees, no minimum balances, and a no-fee robo-advisor support
- SoFi offers free financial planning sessions so you can learn how to get hands-on with your account and make the best retirement investments
SoFi really wants to be an all-service personal finance company. In addition to other financial services already mentioned, SoFi members also get free career counseling, financial planning sessions, and estate planning services. SoFi also has life, car, home, and renters insurance.
One downside to SoFi is that they don’t offer mutual funds or socially responsible investment options.
- Account minimum: $0
- Fees: 0.25% or 0.40% annually
- Pros: Low fees, access to human financial advisor, and multiple portfolio options and customization
- Cons: No direct indexing
Betterment is one of the original robo-advisory investing platforms. Since it was founded in 2008, Betterment has become a leader in terms of affordability and accessibility, micro-investing options, and financial planning packages that let you speak with a human advisor when you need to.
Betterment is one of the best SEP IRA providers because:
- Betterment is a robo-advisor, offering low fees on accounts with many options. Betterment includes a high-yield cash account with debit card access, advanced tax-saving strategies, socially responsible investing options, automatic features like dividend investing, and much more.
- You can still access a human advisor to help with major financial planning, and Betterment’s financial planning packages begin at $199.
Robo-advisors use algorithms built on general investment principles to make portfolio recommendations based on your risk tolerance and retirement timeline. Betterment’s algorithms also make sure your account stays balanced and implements a daily tax-loss harvesting strategy.
Robo-advisors are ideal for hands-off investors and those who are new to investing because you don’t have to make decisions on your own. Plus, robo-advisors are affordable because they use technology to make decisions.
Betterment’s SEP IRA has a $0 minimum balance and a 0.25% annual fee, which is ~$2.50 for every $1,000 you have invested.
Once you have $100,000 invested, you can upgrade to a Premium plan for 0.40% AUM. It includes unlimited calls and emails with Betterment’s team of certified financial planners, plus in-depth advice on non-Betterment investments.
- Account minimum: $500
- Fees: 0.25% annual fee
- Pros: Low fees, customizable portfolios, daily tax-loss harvesting, and automatic rebalancing
- Cons: No fractional shares
Since it was founded in 2008, Wealthfront has grown to become another top name among robo-advisors, and offers broad financial support and automated investing tools that go beyond your retirement needs.
Wealthfront is one of the best SEP IRA providers because:
- Wealthfront provides investors with comprehensive planning tools so you can set goals and keep yourself on track for retirement.
- It offers customizable portfolios with exposure to socially responsible investments, tech, crypto, and more.
- According to Wealthfront, it’s daily tax-loss harvesting adds an average 1.8% to clients’ after-tax returns.
Besides one of the best SEP IRA accounts, Wealthfront offers college savings accounts, personal investment accounts, and cash accounts. It also offers a Portfolio Line of Credit so investors can borrow up to 30% of their portfolio with rates as low as 3.15%.
Wealthfront’s SEP IRA has a $500 account minimum and charges 0.25% annual fee, which is fairly standard among robo-advisors. Learn more in our full Wealthfront Review.
- Account minimum: $0
- Fees: $0 management fees
- Pros: No management fees, excellent customer service, broad range of low-cost investment options
- Cons: High broker assisted trading fees
Fidelity is definitely one of the best options for IRA investments and specifically for SEP IRAs. Fidelity was established in 1946 and is known as a mutual fund-based brokerage. In the past few years it’s made moves to make itself attractive to a wide range of investors.
Fidelity’s stand out features if you’re considering opening an SEP IRA are:
- No opening or closing fees, and no annual fees, plus $0 commissions for online U.S. stock, ETF, and options trades.
- Stellar customer service. Fidelity offers 24/7 phone support with a real human customer service representative and more than 190 physical locations in the U.S.
You have lots of options for your IRA investments with Fidelity: mutual funds (there’s no minimum to invest in mutual funds with Fidelity), ETFs, stocks, bonds and U.S. treasury, annuities, and FDIC-insured CDs.
Fidelity is also known for having some of the lowest expense ratios on the market, with four zero expense ratio index mutual funds: Fidelity ZERO Large Cap Index Fund, Fidelity ZERO Extended Market Index Fund, Fidelity ZERO Total Market Index Fund, and Fidelity ZERO International Index Fund.
- Account minimum: $0
- Fees: $20/year for accounts under $100,000
- Pros: Known low-cost mutual funds, commission-free stock and ETF trades, and strong customer service
- Cons: Limited research and data
If you’re a self-employed person and will be opening an account for yourself, Vanguard has one of the best SEP IRA options. Vanguard is a popular choice among cost-conscious investors because of its mutual funds, which are 83% cheaper than comparable funds found elsewhere.
Here’s what makes Vanguard’s plan shine:
- Vanguard is owned by the shareholders of its mutual funds, so it does not benefit from unnecessary fees or rate increases.
- For accounts with at least $50,000 invested, you have access to Vanguard Personal Advisor Services, which is a personal financial planning service, rather than a robo-advisor only service. This service does have an annual fee of 0.3% AUM (assets under management), and Vanguard bills quarterly.
The ability to access a human advisor is huge for anyone who feels unsure about managing their assets on their own. Vanguard advisors help to create a retirement plan, and work to increase tax efficiency. Your account is reviewed quarterly to rebalance and help maximize returns.
The financial advisory service with Vanguard is optional, and all Vanguard SEP IRAs can invest in a diverse set of assets. They also have one of the lowest average expense ratios: 0.10% compared to the industry average of 0.58%.
There are no minimums to open a Vanguard SEP IRA. Vanguard charges $20/year for accounts under $10,000. However, you can circumvent that fee by signing up for electronic statements.
7. Charles Schwab
About Charles Schwab
- Account minimum: $0
- Fees: $0 management fees for basic accounts
- Pros: Wide range of investment offerings, excellent customer service, and in-person support at Schwab branches
- Cons: Robo-advisor services are limited to Schwab Intelligent Porfolios, which has a $5,000 account minimum
Since it was founded in 1971, Charles Schwab has easily become one of the most identifiable names in investing. In recent years, Schwab has a renewed dedication to offering modern options to keep up with current investing trends, such as a robust online platform, eliminating commissions, and even micro-investing options.
Charles Schwab’s has one of the best SEP IRA accounts for a couple of stand-out reasons:
- Zero to low fees – There are no monthly maintenance fees, no account minimums, no opening fees, and $0 per online trade.
- A long list of zero-fee mutual funds and ETFs with lower than average expense ratios.
Setting up an SEP IRA with Charles Schwab is easy to do with their online platform. You can manage it yourself or use one of the Schwab Intelligent Portfolios, which uses the robo-advisor model to recommend investments based on your risk tolerance. However, you’ll need a $5,000 minimum balance to be eligible for that.
Schwab is known for excellent customer service, and you can connect with someone on the phone to walk you through the process of setting up an SEP IRA for yourself and your employees.
How to Choose a SEP IRA
When you’re looking for the best SEP IRA, there are a few key things that you should research. These were used in putting together this list, and they can help save money and streamline your retirement planning process.
- Low fees and expense ratios: The SEP IRA fees that can get you are expense ratios, deposit fees, withdrawal fees, and maintenance fees. When you’re spending more money on fees, there’s less to invest for retirement. The best SEP IRA providers will have a transparent fee schedule in addition to low fees. You should be able to Google “[name of brokerage] SEP IRA fees” and easily pull up a list.
- Easy set-up process: If you’re new to investing, setting up your first account may feel stressful, but the best brokerages will have a streamlined account to reduce any headaches. Setting up an IRA for yourself is surprisingly easy. Answer a few questions, enter your SSN, and that’s basically it. It’s setting them up for your employees that can take a little more time. Look for a brokerage that clearly outlines the steps and offers phone support if needed.
- Quality customer service: Customer service is an extremely important factor when opening an IRA account of any kind. Ideally, they’ll offer phone support, but quality email or online chat options are a must. A number of the brokerages on this list offer more intensive financial planning services if you want help planning for retirement, which can be helpful.
- Diverse investment options: Diversification is key to a good investment strategy, and the best SEP IRA providers will have stocks, ETFs, bonds, mutual funds, and more. You want as many options as possible so you can stay on track for retirement.
For even more retirement related content, check out:
The Final Word on the Best SEP IRAs
Opening a SEP IRA is an option for self-employed people and small business owners to start a tax-advantaged retirement savings account.
It’s worth mentioning that zero to low fees are becoming the norm. Traditional brokerages like Schwab and Fidelity are trying to compete with inherently more affordable online brokerages like Betterment and SoFi. We bring this up because there’s no reason to pay high fees right now. Keep that in mind as you shop around.
Self-employed people, like freelancers, and small business owners who have few to zero employees are generally eligible for SEP IRAs.
The reason why we say “few to zero” is because if you’re the business owner opening IRA accounts for your employees, you must contribute on their behalf, and the contributions must match what you contribute to your own account.
For example, if you want to contribute 20% of your pay to your SEP IRA, then you also need to contribute 20% of each employee’s pay to their SEP IRAs.
Your employees are eligible to participate if they meet these requirements:
At least 21 years old
Have worked for you for three of the past five years
Have earned at least $600 from you in the past year
You can contribute up to $66,000 to your SEP IRA or 25% of your compensation in 2023 —whichever is the lesser of the two. The 25% of compensation limit is also the limit of how much you can contribute for each eligible employee.
The contribution limit is one of the most notable differences between an SEP IRA and a traditional one, which sets a limit at $6,500 for 2023.
The downside is that with an SEP IRA there are no catch-up contributions for those 50+. Those are allowed with traditional and Roth IRAs, and the catch-up contribution limit is an additional $1,000.
It’s also worth noting that IRA contribution limits change year-by-year. The contribution limits above are for this year, 2023.
SEP stands for Simplified Employee Pension, and it’s a type of traditional IRA for self-employed people or small business owners with no to very few employees. When you hear someone say SEP, they’re talking about a SEP IRA.
SEP IRAs and other kinds of IRAs are tax-advantaged accounts that hold many different types of investments. Individual investments may lose value, and it is possible to lose money in a SEP IRA, but it’s very, very unlikely you’d lose everything.
The two best ways to protect your IRA investments is to diversify them. Don’t invest everything in one or two investments. Also, as you get older and closer to retirement age, you’ll want to rebalance your portfolio so it stays aligned with your risk tolerance.