A Simplified Employee Pension Individual Retirement Arrangement (SEP IRA) is a variation of the Individual Retirement Account used in the United States. SEP IRAs are adopted by business owners to provide retirement benefits for the business owners and their employees. There are no significant administration costs for self-employed person with no employees. If the self-employed person does have employees, all employees must receive the same benefits under a SEP plan. Since SEP accounts are treated as IRAs, funds can be invested the same way as any other IRA. The deadline for establishing the plan and making contributions is the filing deadline for the employer’s tax return, including extensions. The most strict conditions for an employee to be eligible are as follows. The employee must: 1) be at least 21 years of age 2) have worked for the employer for at least three of the previous five years, and 3) have received at least $550 in compensation for the tax year SEP-IRA funds are taxed at ordinary income tax rates when qualified withdrawals are taken after age 59 1/2 (as for traditional IRAs). Contributions to a SEP plan are deductible; they will lower a taxpayer’s income tax liability in the contribution year.