# SEP IRA

*Retirement & Benefits — Finicade finance glossary*

A SEP IRA lets a self-employed person or small employer contribute a percentage of compensation — up to 25%, capped in dollars — with almost no administration. It's the simplest way for a freelancer to shelter a large sum. The catch for anyone with staff is that contributions must be the same percentage for every eligible employee, which is why a solo 401(k) is usually better for a one-person business.

**Also known as:** SEP, simplified employee pension

**Related terms:** [Solo 401(k)](https://finicade.com/glossary/solo-401k), [SIMPLE IRA](https://finicade.com/glossary/simple-ira), [Self-Employment Tax](https://finicade.com/glossary/self-employment-tax), [Traditional IRA](https://finicade.com/glossary/traditional-ira), [Contribution Limit](https://finicade.com/glossary/contribution-limit)

Source: https://finicade.com/glossary/sep-ira