The Simplified Employee Pension (SEP) Plan Option
It may surprise financial planners to know that small businesses are predominant in the United States. Sadly, however, too many small businesses do not offer a retirement plan to their workforce. Surveys frequently show that the reason small businesses don’t offer plans is because retirement programs are expensive to set up, and perhaps more importantly, the small business does not believe it has the resources to administer the plan. This represents both a challenge and an opportunity. First, financial planners are tasked with convincing mom and pop shops to install and maintain a plan. Second, planners must identify the right plan that fits the company’s distinct needs. And third, financial planners must help manage the plan for the small organization.
A Simplified Employee Pension (SEP) retirement plan provides business owners with an uncomplicated method to contribute funds toward their employees’ and their own retirement. A SEP involves the business making contributions to an individual retirement account (IRA), which is set up for each employee eligible for the plan.
The only thing a SEP sponsor needs to do to set up and administer a SEP is ask the financial planner and their associated institution (bank, insurance company, etc.) to do the heavy lifting and let the financial planner oversee the plan. As for the financial planner’s role, “nothing is easy,” but the SEP is straightforward, and it is more manageable to implement and oversee than other types of retirement plans.
Planners who are able to counsel small-business clients about retirement plans should have successful and lucrative careers that do a lot of good for a lot of people.