SEP RETIREMENT PLANS 

FOR SMALL BUSINESSES
SEP Retirement Plans for Small Businesses is a joint project of the U.S. Department of 

Labor’s Employee Benefits Security Administration (EBSA) and the Internal Revenue Service.

To view this and other EBSA publications, visit the agency’s website.

To order publications or speak with a benefits advisor, contact EBSA 

electronically or call toll free: 866-444-3272.

This material will be made available in alternative format 

to persons with disabilities upon request: 

Voice phone: (202) 693-8664 

TTY: (202) 501-3911 

This booklet constitutes a small en ti ty compliance guide for pur pos es of the Small Business 

Regulatory Enforcement Fairness Act of 1996.
SEP RETIREMENT PLANS FOR SMALL BUSINESSES 1

Looking for an easy and low-cost retirement plan? 

Why not consider a SEP?

Simplified Employee Pension (SEP) plans can provide a significant source of income at retirement 

by allowing employers to set aside money in retirement accounts for themselves and their employees. 

Under a SEP, an employer contributes directly to traditional individual retirement accounts (SEP-IRAs) 

for all employees (including themselves). A SEP is easier to set up and has lower operating costs than a 

conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.

Advantages of a SEP

n Contributions to a SEP are tax deductible and your business pays no taxes on the earnings on 

the investments. 

n You are not locked into making contributions every year. In fact, you decide each year whether, 

and how much, to contribute to your employees’ SEP-IRAs. 

n Generally, you do not have to file any documents with the government.

n Sole proprietors, partnerships, and corporations, including S corporations, can set up SEPs. 

n You may be eligible for a tax credit of up to $500 per year for each of the first 3 years for the 

cost of starting the plan.

n Administrative costs are low. 
2 U.S. DEPARTMENT OF LABOR

As you read this booklet, here are some definitions you will find helpful: 

Employee – An “employee” is not only someone who works for you, but also includes you if you 

receive compensation from the business. In other words, you can contribute to a SEP-IRA on your 

own behalf. The term also includes employees of certain other businesses you and/or your family own 

and certain leased employees.

Eligible Employee – An eligible employee is an employee who: 

1. Is at least age 21, and 

2. Has performed service for you in at least 3 of the last 5 years. 

All eligible employees must participate in the plan, including part-time employees, seasonal 

employees, and employees who die or terminate employment during the year. 

Your SEP may also cover the following employees, but there is no requirement to cover them: 

n Employees covered by a collective bargaining agreement, if retirement benefits in the 

collectively bargained plan were the subject of good faith bargaining;

n Nonresident alien employees who did not earn income from you; or

n Employees who received less than $650 in compensation during the year (subject to cost-ofliving adjustments). 

Compensation – The term generally includes the pay an employee received from you for a year’s 

work. As the owner/employee, your compensation is the pay you received from the company. You 

must follow the definition of compensation included in your plan document.

Establishing The Plan

There are just a few simple steps to establish a SEP.

Step 1: Contact a retirement plan professional or a representative of a financial institution that offers 

retirement plans and choose the IRS model SEP, Form 5305-SEP, Simplified Employee Pension – 

Individual Retirement Accounts Contribution Agreement, or another plan document offered by the 

financial institution. (See Resources below for a link to the Form 5305-SEP.)

Choosing a financial institution to maintain your SEP is one of the most important decisions you will 

make, since that entity becomes a trustee to the plan. Trustees work with employers and agree to:

n Receive and invest contributions, and

n Provide each participant with a notice of employer contributions made each year and the value 

of his/her SEP-IRA at the end of the year.

Trustees of SEP-IRAs are generally banks, mutual funds, insurance companies that issue annuity 

contracts, and certain other financial institutions that have been approved by the IRS.
SEP RETIREMENT PLANS FOR SMALL BUSINESSES 3

Step 2: Complete and sign Form 5305-SEP 

(or other plan document if not using the IRS 

model form). Regardless of the SEP document 

you choose, it will include the name of the 

employer, the requirements for employee 

participation, and a written allocation formula 

for the employer’s contribution. When it is 

completed and signed, this form becomes the 

plan’s basic legal document, describing your 

employees’ rights and benefits. Do not send it 

to the IRS; instead, use it as a reference since 

it sets out the plan terms (for example, eligible 

employees, compensation, and employer 

contributions).

A SEP may be established as late as the due 

date (including extensions) of the company’s 

income tax return for the year you want 

to establish the plan. For example, if your 

business’s fiscal year (a corporate entity) 

ends on December 31 and you filed for the 

automatic 6-month extension, the company’s 

tax return for the year ending December 

31, 2020, would be due on October 15, 

2021, allowing you to make the initial SEP 

contribution no later than October 15, 2021.

Step 3: Give your employees a copy of the 

Form 5305-SEP (or other plan document if 

not using the IRS model form) and its instructions, along with certain information about SEP-IRAs 

(described in Employee Communications below). The model SEP is not considered adopted until 

each employee is provided with a written statement explaining that:

1. A SEP-IRA may provide different rates of return and contain different terms than other IRAs 

the employee may have;

2. The administrator of the SEP will provide a copy of any amendment within 30 days of the 

effective date, along with a written explanation of its effects; and

3. Participating employees will receive a written report of employer contributions made to their 

SEP-IRAs by January 31 of the following year.
4 U.S. DEPARTMENT OF LABOR

Operating The Plan

Once in place, a SEP is simple to operate. Your trustee will take care of depositing the contributions, 

investments, annual statements, and any required filings with the IRS. You will need to ensure that 

your plan is kept current with the law.

Contributions to SEP-IRAs

Your obligation is to forward contributions to your financial institution/trustee for those employees 

who participate as described in your plan document. You will want to keep your financial institution 

aware of any changes in the status of those employees in the plan. As you hire new employees, for 

instance, you will include them in the SEP if they satisfy the eligibility criteria described in the plan. 

Your contributions to each employee’s SEP-IRA for a year cannot exceed the lesser of 25 percent 

of the employee’s compensation for the year or a dollar amount that is subject to cost-of-living 

adjustments. The dollar amount is $57,000 for 2020 and $58,000 for 2021. These limits apply to your 

total contributions to this plan and any other defined contribution plans (other SEP, 401(k), 403(b), 

profit sharing, or money purchase plan) you have.

You do not have to contribute every year. When you contribute, you must contribute to the SEP-IRAs 

of all participants who performed work for your business during the year for which the contributions 

are made, even participants who die or terminate employment before the contributions are made. 
SEP RETIREMENT PLANS FOR SMALL BUSINESSES 5

Contributions for all participants generally must be uniform – for example, the same percentage of 

compensation.

Employee salary reduction contributions cannot be made under a SEP.

There are special rules if you are a self-employed individual. For more information on the deduction 

limitations for self-employed individuals, see IRS Publication 560, Retirement Plans for Small 

Business (SEP, SIMPLE, and Qualified Plans).

How Does a SEP Work?

Quincy Company decides to establish a SEP for its employees. Quincy has chosen a SEP because its 

industry is cyclical in nature, with good times and down times. In good years, Quincy can make larger 

contributions for its employees, and in down times it can reduce the amount. Quincy knows that under 

a SEP, the contribution rate (whether large or small) must be uniform for all employees. The financial 

institution that Quincy has selected to be the trustee for its SEP has several investment funds from 

which the Quincy employees can choose. Individual employees have the opportunity to divide their 

employer’s contributions to their SEP-IRAs among the funds made available to Quincy’s employees. 

Employee Communications

When employees participate in a SEP, they must receive certain key disclosure documents from you 

and the financial institution:

n You must give employees a copy of IRS Form 5305-SEP and its instructions (or other document 

that was used to establish the plan). When new employees become eligible to participate in the 

plan, they also must receive a copy of the plan.

n You must also provide a written statement containing information about the terms of the SEP, 

how changes are made to the plan, and when employees are to receive information about 

contributions to their accounts. (See Step 3 above.)

n In addition to the information above, the financial institution provides an annual statement for 

each participant’s SEP-IRA, reporting the fair market value of that account. 

n The financial institution also gives participating employees a copy of the annual statement filed 

with the IRS containing contribution and fair market value information. (See Reporting to the 

Government below.)

n When an employee participating in the plan receives distributions from their account, the 

financial institution sends that employee a copy of the form that is filed with the IRS for the 

individual’s distribution. (See Reporting to the Government below.) 

n The financial institution should notify the participant by January 31 of each year when a 

minimum distribution is required. (See Distributions below.)
6 U.S. DEPARTMENT OF LABOR

Reporting to the Government

SEPs generally are not required to file annual financial reports with the Federal Government. SEP-IRA

contributions are not included on the Form W-2, Wage and Tax Statement.

The financial institution/trustee handling employees’ SEP-IRAs provides the IRS and participating 

employees with an annual statement containing contribution and fair market value information on 

Form 5498, IRA Contribution Information.

Your financial institution also will report on Form 1099-R, Distributions From Pensions, Annuities, 

Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., any distributions it makes from 

participating employees’ accounts. The Form 1099-R is sent to those receiving distributions and to the 

IRS.

Distributions

Participants cannot take loans from their SEP-IRAs.

However, participants can make withdrawals at any time. These monies can be rolled over tax-free to 

another SEP-IRA, to a traditional IRA, or to another employer’s qualified retirement plan (provided 

the other plan allows rollovers). Money withdrawn from a SEP-IRA (and not rolled over to another 

plan) is subject to income tax for the year in which an employee receives a distribution. If an employee 

withdraws money from a SEP-IRA before age 591⁄2, a 10 percent additional tax generally applies. 

As with other traditional IRAs, participants in a SEP-IRA must begin withdrawing a specific minimum 

amount from their accounts by April 1 of the year following the year the participant reaches age 72. 

After this initial year, they must withdraw an additional required minimum distribution amount by 

December 31 of that year and annually thereafter. A participant that reached age 701⁄2 before 2020 

may have a required minimum distribution for 2021 even though they’re not yet 72. The financial 

institution/trustee should notify the participant by January 31 of each year when a minimum 

distribution is required. (For further details regarding the required minimum distribution amount, see 

IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).)

Monitoring the Trustee

As the plan sponsor, you should monitor the financial institution/trustee to assure that it is doing 

everything it is required to do. You should also ensure that the trustee’s fees are reasonable for the 

services it is providing. If the trustee is not doing its job properly, or if its fees are not reasonable, you 

should consider replacing the trustee.
SEP RETIREMENT PLANS FOR SMALL BUSINESSES 7

Terminating The Plan

Although SEPs are established with the intention of continuing indefinitely, the time may come when 

a SEP no longer suits the purposes of your business. If that happens, consult with your financial 

institution to determine if another type of retirement plan might be a better alternative.

To terminate a SEP, notify the financial institution that you will not make a contribution for the next 

year and that you want to terminate the contract or agreement. Although not mandatory, it is a good 

idea to notify your employees that the plan will be discontinued. You do not need to give any notice to 

the IRS that the SEP has been terminated.

Mistakes... And How to Correct Them

Even with the best of intentions, mistakes in plan operation can happen. The U.S. Department of 

Labor and the IRS have correction programs to help employers with SEPs correct plan errors, protect 

participants’ interests, and keep the plan’s tax benefits. These programs are structured to encourage 

early error correction. 

Ongoing review makes it easier to spot and correct mistakes in plan operations. See the Resources

section for further information. 

Your SEP — A Quick Review

n Choose a financial institution to set up your SEP.

n Sign the agreement; set up the SEP-IRAs.

n Inform your employees about the plan.

n Deposit contributions by the due date of your tax return.

n Monitor your financial institution/trustee.
8 U.S. DEPARTMENT OF LABOR

Resources

To find this publication and more information on retirement plans, visit:

The U.S. Department of Labor’s Employee Benefits Security Administration

n Main site

n Information for small businesses

n Retirement savings information for employers and employees

Internal Revenue Service

n Main site

n Guidance for maintaining your SEP retirement plan

n Form 5305-SEP

n Retirement Plans Startup Costs Tax Credit

n SEP Plan Fix-It Guide

In addition, the following jointly developed publications are available on the DOL and IRS 

websites or can be ordered electronically or by calling toll free: 866-444-3272.

n Choosing a Retirement Solution for Your Small Business, Publication 3998, provides an 

overview of retirement plans available to small businesses. 

n 401(k) Plans for Small Businesses, Publication 4222, provides detailed information regarding 

the establishment and operation of a 401(k) plan.

n Adding Automatic Enrollment to Your 401(k) Plan, Publication 4721, explains how to add 

automatic enrollment to your existing 401(k) plan. 

n Automatic Enrollment 401(k) Plans for Small Businesses, Publication 4674, explains a type of 

retirement plan that allows small businesses to increase plan participation. 

n Payroll Deduction IRAs for Small Businesses, Publication 4587, describes an arrangement that 

is an easy way for businesses to give employees an opportunity to save for retirement. 

n Profit Sharing Plans for Small Businesses, Publication 4806, describes a flexible way for 

businesses to help employees save for retirement.

n SIMPLE IRA Plans for Small Businesses, Publication 4334, describes a type of retirement plan 

designed especially for small businesses.
SEP RETIREMENT PLANS FOR SMALL BUSINESSES 9

For business owners with a plan

n Retirement Plan Correction Programs, Publication 4224, briefly describes the IRS and DOL 

voluntary correction programs.

Related materials available from DOL

DOL sponsors an interactive website – the Small Business Retirement Savings Advisor – that 

encourages small business owners to choose the appropriate retirement plan for their businesses and 

provides resources on maintaining plans.

Related materials available from the IRS

n Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), Publication 560

n Contributions to Individual Retirement Arrangements (IRAs), Publication 590-A

n Distributions from Individual Retirement Arrangements (IRAs), Publication 590-B

n Have you had your Check-up this year? for Retirement Plans, Publication 3066

n SEP Checklist, Publication 4285

n Lots of Benefits, Publication 4118

To view these related publications, go to the IRS’s website.
D D 

D D D D 

Form 5305-SEP

(Rev. December 2004) 

Simplified Employee Pension—Individual 

Retirement Accounts Contribution Agreement 

OMB No. 1545-0499 

Do not file 

with the Internal Department of the Treasury (Under section 408(k) of the Internal Revenue Code) Revenue Service Internal Revenue Service 

(Name of employer) 

makes the following agreement under section 408(k) of the 

Internal Revenue Code and the instructions to this form. 

Article I—Eligibility Requirements (check applicable boxes—see instructions) 

The employer agrees to provide discretionary contributions in each calendar year to the individual retirement account or individual 

retirement annuity (IRA) of all employees who are at least years old (not to exceed 21 years old) and have performed 

services for the employer in at least years (not to exceed 3 years) of the immediately preceding 5 years. This simplified 

employee pension (SEP) includes does not include employees covered under a collective bargaining agreement, 

includes does not include certain nonresident aliens, and includes does not include employees whose total 

compensation during the year is less than $450*. 

Article II—SEP Requirements (see instructions) 

The employer agrees that contributions made on behalf of each eligible employee will be: 

A. Based only on the first $205,000* of compensation. 

B. The same percentage of compensation for every employee. 

C. Limited annually to the smaller of $41,000* or 25% of compensation. 

D. Paid to the employee’s IRA trustee, custodian, or insurance company (for an annuity contract). 

Employer’s signature and date Name and title 

Instructions 

Section references are to the Internal 

Revenue Code unless otherwise noted. 

Purpose of Form 

Form 5305-SEP (Model SEP) is used by an 

employer to make an agreement to provide 

benefits to all eligible employees under a 

simplified employee pension (SEP) described 

in section 408(k). 

Do not file Form 5305-SEP with the IRS. 

Instead, keep it with your records. 

For more information on SEPs and IRAs, 

see Pub. 560, Retirement Plans for Small 

Business (SEP, SIMPLE, and Qualified Plans), 

and Pub. 590, Individual Retirement 

Arrangements (IRAs). 

Instructions to the Employer 

Simplified employee pension. A SEP is a 

written arrangement (a plan) that provides you 

with an easy way to make contributions 

toward your employees’ retirement income. 

Under a SEP, you can contribute to an 

employee’s traditional individual retirement 

account or annuity (traditional IRA). You make 

contributions directly to an IRA set up by or 

for each employee with a bank, insurance 

company, or other qualified financial 

institution. When using Form 5305-SEP to 

establish a SEP, the IRA must be a Model 

traditional IRA established on an IRS form or 

a master or prototype traditional IRA for 

which the IRS has issued a favorable opinion 

letter. You may not make SEP contributions 

to a Roth IRA or a SIMPLE IRA. Making the 

agreement on Form 5305-SEP does not 

establish an employer IRA described in 

section 408(c). 

When not to use Form 5305-SEP. Do not 

use this form if you: 

1. Currently maintain any other qualified 

retirement plan. This does not prevent you 

from maintaining another SEP. 

2. Have any eligible employees for whom 

IRAs have not been established. 

3. Use the services of leased employees 

(described in section 414(n)). 

4. Are a member of an affiliated service 

group (described in section 414(m)), a 

controlled group of corporations (described in 

section 414(b)), or trades or businesses under 

common control (described in sections 414(c) 

and 414(o)), unless all eligible employees of 

all the members of such groups, trades, or 

businesses participate in the SEP. 

5. Will not pay the cost of the SEP 

contributions. Do not use Form 5305-SEP for 

a SEP that provides for elective employee 

contributions even if the contributions are 

made under a salary reduction agreement. 

Use Form 5305A-SEP, or a nonmodel SEP. 

Note. SEPs permitting elective deferrals 

cannot be established after 1996. 

Eligible employees. All eligible employees 

must be allowed to participate in the SEP. An 

eligible employee is any employee who: (1) is 

at least 21 years old, and (2) has performed 

“service” for you in at least 3 of the 

immediately preceding 5 years. You can 

establish less restrictive eligibility 

requirements, but not more restrictive ones. 

Service is any work performed for you for 

any period of time, however short. If you are 

a member of an affiliated service group, a 

controlled group of corporations, or trades or 

businesses under common control, service 

includes any work performed for any period 

of time for any other member of such group, 

trades, or businesses. 

Excludable employees. The following 

employees do not have to be covered by the 

SEP: (1) employees covered by a collective 

bargaining agreement whose retirement 

benefits were bargained for in good faith by 

you and their union, (2) nonresident alien 

employees who did not earn U.S. source 

income from you, and (3) employees who 

received less than $450* in compensation 

during the year. 

Contribution limits. You may make an 

annual contribution of up to 25% of the 

employee’s compensation or $41,000*, 

whichever is less. Compensation, for this 

purpose, does not include employer 

contributions to the SEP or the employee’s 

compensation in excess of $205,000*. If you 

also maintain a salary reduction SEP, 

contributions to the two SEPs together may 

not exceed the smaller of $41,000* or 25% of 

compensation for any employee. 

You are not required to make contributions 

every year, but when you do, you must 

contribute to the SEP-IRAs of all eligible 

employees who actually performed services 

during the year of the contribution. This 

includes eligible employees who die or quit 

working before the contribution is made. 

Contributions cannot discriminate in favor of 

highly compensated employees. Also, you may 

not integrate your SEP contributions with, or 

offset them by, contributions made under the 

Federal Insurance Contributions Act (FICA). 

If this SEP is intended to meet the 

top-heavy minimum contribution rules of 

section 416, but it does not cover all your 

employees who participate in your salary 

reduction SEP, then you must make minimum 

contributions to IRAs established on behalf of 

those employees. 

Deducting contributions. You may deduct 

contributions to a SEP subject to the limits of 

section 404(h). This SEP is maintained on a 

calendar year basis and contributions to the 

* For 2005 and later years, this amount is subject to annual cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue 

Bulletin, and on the IRS website at www.irs.gov. 

For Paperwork Reduction Act Notice, see page 2. Cat. No. 11825J Form 5305-SEP (Rev. 12-2004) 
Form 5305-SEP (Rev. 12-2004) Page 2 

SEP are deductible for your tax year with or 

within which the calendar year ends. 

Contributions made for a particular tax year 

must be made by the due date of your 

income tax return (including extensions) for 

that tax year. 

Completing the agreement. This agreement 

is considered adopted when: 

• IRAs have been established for all your 

eligible employees; 

• You have completed all blanks on the 

agreement form without modification; and 

• You have given all your eligible employees 

the following information: 

1. A copy of Form 5305-SEP. 

2. A statement that traditional IRAs other 

than the traditional IRAs into which employer 

SEP contributions will be made may provide 

different rates of return and different terms 

concerning, among other things, transfers and 

withdrawals of funds from the IRAs. 

3. A statement that, in addition to the 

information provided to an employee at the 

time the employee becomes eligible to 

participate, the administrator of the SEP must 

furnish each participant within 30 days of the 

effective date of any amendment to the SEP, 

a copy of the amendment and a written 

explanation of its effects. 

4. A statement that the administrator will 

give written notification to each participant of 

any employer contributions made under the 

SEP to that participant’s IRA by the later of 

January 31 of the year following the year for 

which a contribution is made or 30 days after 

the contribution is made. 

Employers who have established a SEP 

using Form 5305-SEP and have furnished 

each eligible employee with a copy of the 

completed Form 5305-SEP and provided the 

other documents and disclosures described in 

Instructions to the Employer and Information 

for the Employee, are not required to file the 

annual information returns, Forms 5500 or 

5500-EZ for the SEP. However, under Title I of 

the Employee Retirement Income Security Act 

of 1974 (ERISA), this relief from the annual 

reporting requirements may not be available to 

an employer who selects, recommends, or 

influences its employees to choose IRAs into 

which contributions will be made under the 

SEP, if those IRAs are subject to provisions 

that impose any limits on a participant’s ability 

to withdraw funds (other than restrictions 

imposed by the Code that apply to all IRAs). 

For additional information on Title I 

requirements, see the Department of Labor 

regulation at 29 CFR 2520.104-48. 

Information for the Employee 

The information below explains what a SEP is, 

how contributions are made, and how to treat 

your employer’s contributions for tax 

purposes. For more information, see Pub. 590. 

Simplified employee pension. A SEP is a 

written arrangement (a plan) that allows an 

employer to make contributions toward your 

retirement. Contributions are made to a 

traditional individual retirement 

account/annuity (traditional IRA). 

Contributions must be made to either a 

Model traditional IRA executed on an IRS 

form or a master or prototype traditional IRA 

for which the IRS has issued a favorable 

opinion letter. 

An employer is not required to make SEP 

contributions. If a contribution is made, 

however, it must be allocated to all eligible 

employees according to the SEP agreement. 

The Model SEP (Form 5305-SEP) specifies 

that the contribution for each eligible 

employee will be the same percentage of 

compensation (excluding compensation 

greater than $205,000*) for all employees. 

Your employer will provide you with a copy of 

the agreement containing participation rules and 

a description of how employer contributions 

may be made to your IRA. Your employer must 

also provide you with a copy of the completed 

Form 5305-SEP and a yearly statement showing 

any contributions to your IRA. 

All amounts contributed to your IRA by your 

employer belong to you even after you stop 

working for that employer. 

Contribution limits. Your employer will 

determine the amount to be contributed to 

your IRA each year. However, the amount for 

any year is limited to the smaller of $41,000* 

or 25% of your compensation for that year. 

Compensation does not include any amount 

that is contributed by your employer to your 

IRA under the SEP. Your employer is not 

required to make contributions every year or 

to maintain a particular level of contributions. 

Tax treatment of contributions. Employer 

contributions to your SEP-IRA are excluded 

from your income unless there are 

contributions in excess of the applicable limit. 

Employer contributions within these limits will 

not be included on your Form W-2. 

Employee contributions. You may make 

regular IRA contributions to an IRA. However, 

the amount you can deduct may be reduced 

or eliminated because, as a participant in a 

SEP, you are covered by an employer 

retirement plan. 

SEP participation. If your employer does not 

require you to participate in a SEP as a 

condition of employment, and you elect not to 

participate, all other employees of your 

employer may be prohibited from participating. 

If one or more eligible employees do not 

participate and the employer tries to establish 

a SEP for the remaining employees, it could 

cause adverse tax consequences for the 

participating employees. 

An employer may not adopt this IRS Model 

SEP if the employer maintains another 

qualified retirement plan. This does not 

prevent your employer from adopting this IRS 

Model SEP and also maintaining an IRS 

Model Salary Reduction SEP or other SEP. 

However, if you work for several employers, 

you may be covered by a SEP of one 

employer and a different SEP or pension or 

profit-sharing plan of another employer. 

SEP-IRA amounts—rollover or transfer to 

another IRA. You can withdraw or receive 

funds from your SEP-IRA if, within 60 days of 

receipt, you place those funds in the same or 

another IRA. This is called a “rollover” and 

can be done without penalty only once in any 

1-year period. However, there are no 

restrictions on the number of times you may 

make “transfers” if you arrange to have these 

funds transferred between the trustees or the 

custodians so that you never have 

possession of the funds. 

Withdrawals. You may withdraw your 

employer’s contribution at any time, but any 

amount withdrawn is includible in your 

income unless rolled over. Also, if withdrawals 

occur before you reach age 591⁄2, you may be 

subject to a tax on early withdrawal. 

Excess SEP contributions. Contributions 

exceeding the yearly limitations may be 

withdrawn without penalty by the due date 

(plus extensions) for filing your tax return 

(normally April 15), but are includible in your 

gross income. Excess contributions left in 

your SEP-IRA after that time may have 

adverse tax consequences. Withdrawals of 

those contributions may be taxed as 

premature withdrawals. 

Financial institution requirements. The 

financial institution where your IRA is 

maintained must provide you with a disclosure 

statement that contains the following 

information in plain, nontechnical language: 

1. The law that relates to your IRA. 

2. The tax consequences of various options 

concerning your IRA. 

3. Participation eligibility rules, and rules on 

the deductibility of retirement savings. 

4. Situations and procedures for revoking 

your IRA, including the name, address, and 

telephone number of the person designated 

to receive notice of revocation. This 

information must be clearly displayed at the 

beginning of the disclosure statement. 

5. A discussion of the penalties that may 

be assessed because of prohibited activities 

concerning your IRA. 

6. Financial disclosure that provides the 

following information: 

a. Projects value growth rates of your IRA 

under various contribution and retirement 

schedules, or describes the method of 

determining annual earnings and charges that 

may be assessed. 

b. Describes whether, and for when, the 

growth projections are guaranteed, or a 

statement of the earnings rate and the terms 

on which the projections are based. 

c. States the sales commission for each 

year expressed as a percentage of $1,000. 

In addition, the financial institution must 

provide you with a financial statement each 

year. You may want to keep these statements 

to evaluate your IRA’s investment performance. 

Paperwork Reduction Act Notice. You are 

not required to provide the information 

requested on a form that is subject to the 

Paperwork Reduction Act unless the form 

displays a valid OMB control number. Books 

or records relating to a form or its instructions 

must be retained as long as their contents 

may become material in the administration of 

any Internal Revenue law. Generally, tax 

returns and return information are confidential, 

as required by section 6103. 

The time needed to complete this form will 

vary depending on individual circumstances. 

The estimated average time is: 

Recordkeeping 1 hr., 40 min. 

Learning about the 

law or the form 1 hr., 35 min. 

Preparing the form 1 hr., 41 min. 

If you have comments concerning the 

accuracy of these time estimates or suggestions 

for making this form simpler, we would be 

happy to hear from you. You can write to the 

Internal Revenue Service, Tax Products 

Coordinating Committee, SE:W:CAR:MP:T:T:SP, 

1111 Constitution Ave. NW, Washington, DC 

20224. Do not send this form to this address. 

Instead, keep it with your records. 
EMPLOYEE BENEFITS SECURITY ADMINISTRATION

UNITED STATES DEPARTMENT OF LABOR

Publication 4333 (Rev. 11-2020) Catalog Number 38507U

Department of the Treasury Internal Revenue Service www.IRS.gov

November 2020